Both NAR and CAR have been apoplectic about the tax reform bill which is moving its way to the President's desk. The bill passed the House today, should pass the Senate later this week, and is expected to be signed by the President by Christmas.
Will the tax reform bill really hurt San Diego real estate, though ?
Probably not.
Probably not.
The mortgage interest deduction is going to be capped at $750,000 instead of $1,000,000. That could cost some people as much $3000 in extra taxes. Those people though, would see a tax rate lowered by 2% on all of their income; that could be as much as $6,000 in tax savings.
The deduction for property taxes and state income taxes will be capped at $10,000. While there is a trade off for the lower tax rates, this could hurt the buyers over $800,000.
Keep in mind that half of the home sales are under $611,000. MOST people buying in the under $800,000 price point are going to save money from the tax reform bill.
Californians earning over $300,000 and San Diego home buyers over $900,000 may feel a pinch from tax reform but, all in all, most home buyers won't be dissuaded from buying a home up to $800,000. Some of them will actually have MORE money to spend now since their tax bills should be lower.
Investopedia does a pretty goo job of breaking it down here.
Call me at 858-777-9751 if you want to discuss this or have a home buyer worried about how tax reform will help or hurt them. I'm pretty good at running numbers and might just be able to help you save a deal
