How does the recent tax reform plan passed by Congress affect the real estate industry?
The biggest change is how it affects property taxes. The House of Representatives and the Senate agreed to cap property tax credits at $10,000. This might not have an immediate impact in most of the Baltimore metro area because most property taxes are under $10,000, but the luxury areas will definitely see some fallout.
The next big change was the lowering of the mortgage interest deduction from $1 million to $750,000. This means if you have a mortgage that’s $750,000 or more, you’re no longer eligible for that mortgage interest deduction. That’s not a huge market, but those who have mortgages over $750,000 will be greatly impacted because that’s a big deduction. Again, this will cause more of an impact in the luxury market and areas with higher-priced homes.
Moving forward in 2018, we might see income taxes being indirectly affected by this tax reform as well, so that’s something to keep an eye on. We still expect 2018 to be a fairly opportunistic market, though. Interest rates, while expected to climb, will still remain pretty low.
If you have any more questions about how the new tax reform will affect the real estate market or you’re thinking of buying or selling a home soon, don’t hesitate to reach out to us. We’d be glad to help you.