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Fair Skies on Horizon

Buyers who have been concerned about what might happen to the tax laws affecting home ownership should feel more comfortable about moving forward with their decision to purchase. The 2017 Tax Cut and Jobs Act passed by Congress and signed by the President continues to treat real estate as a favored investment.

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Whether it is for a home to live in as your principal residence or to use as rental property, the tax laws are in place but other dynamics to be concerned with are not; mortgage rates are expected to rise as well as prices.

Reasons to buy now:

  1. The mortgage interest deduction is intact for most taxpayers.
  2. The capital gain exclusion for principal residences up to $500,000 remains in place.
  3. Taxpayers can elect annually to take newly increased standard deduction or itemize deductions whichever will benefit them the most.
  4. The house payment with taxes and insurance is most likely cheaper than the rent.
  5. Rents will continue to rise making the difference even greater in the future.
  6. Lock-in the principal & interest payment with a fixed-rate mortgage.
  7. 30-year mortgage terms are available to most borrowers.
  8. Prices will likely increase due to lower inventories and several years of low housing starts.
  9. Section 1031 exchanges, capital gains and depreciation remain the same for rental properties.

For a summary of specific real estate provisions in the 2017 Tax Cut and Jobs Act, click here.


Posted by Landa Pennington on March 19th, 2018 11:14 AM

Realize Tax Savings Sooner

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A homeowner’s tax saving benefit is generally realized when they file their federal income tax return after the money has been spent for the interest and property taxes.  Some people look forward to the refund as a means of forced savings but some people need to realize the savings during the year.


It is possible to adjust the deductions being withheld from the homeowner’s salary so they realize the benefit of the savings prior to filing their tax returns in the form of more money in their pay checks.  Employees would talk to their employers about increasing their deductions stated on their W-4 form.

By increasing the exemptions or deductions, less is taken out of the check and the employee will receive more in each pay check.  If a person over-estimates their exemptions and therefore, underpays their income tax, they might incur interest and would have additional tax to pay when they filed their tax return. 

Buyers considering this strategy should seek tax advice and discuss it with their human relations department at work.   Additional information is available on the Internal Revenue Service website about Completing Form w-4 and Worksheets.

Posted by Landa Pennington on November 16th, 2014 7:03 PM

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