Tax Reform & Real Estate

The proposed tax reform bill is supposed to help the overall economy, however its impact on Real Estate may do just the opposite. Home ownership has always been the fundamental foundation for a strong economy. Some components of this reform bill will for certain negatively effect the housing market. In particular, a reduction in being able to claim more than $10,000 as a deduction for real estate taxes, capping the mortgage interest deduction & the elimination of deducting state & local taxes. There is also a provision to limit a tax break which allows a couple a $500,000 exclusion from capital gains. Now, you must live in your primary home for at least two years, both the house and senate want to change it to living in your house at least five years. While there may be some who will benefit from these reforms, my fear is the damage that can be created to the overall Real Estate markets could far out way any tax advantage.