Here's the 1-2-3 on how the new Tax Bill will affect Homeowners moving forward:
-The new law increases the standard deduction to $12,000 for single filers and $24,000 for joint filers. For many homeowners it no longer makes sense to itemize deductions with the new Mortgage Interest Deduction now capped at $750,000 down from $1 Mil. This greatly affects California since home prices are way higher on average than the rest of the country.
-Capital Gains:
Under current law, homeowners can exclude up to $250,000 (or $500,000 for married couples) in capital gains on the profit from the sale of a home if they have lived in the house for two of the last five years. Now homeowners must have lived in the house for five of the past eight years to qualify for the savings. This affects Cali homeowners since last year 13% lived in their homes between 2 and 5 years. This could force people to stay in their homes longer further decreasing the paper thin inventory we see today.
-“State and local tax” deduction:
SALT deductions are currently used by one in three Californians (you must itemize your deductions to get it), allowing them credit for the relatively high state income tax rate they pay. One estimate says that Californians receive an average $18,000 each in benefits.The only local tax deduction that remains is the deduction for the first $10,000 in property taxes.
And, to note, It eliminates the deduction for moving expenses...... Call your friend that owns a truck. You'll need it...
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