Welcome to San Diego Blog | January 30, 2018
Tax Reform Law Chart
The 2018 Tax Reform was recently signed into law and it makes some major changes to the United States tax code for both individuals and corporations alike.
It is important to talk with your CPA or Tax Professional since I am not a licensed tax advisor. My notes are a collection of my personal understanding of the new tax reform and should not be used as tax advice or fact. If you have any questions or need a Tax professional to speak with, feel free to reach out to me directly.
With that in mind, here’s a guide from the California Association of Realtors that outline the Prior Law vs the New Law:
Current Market Trends
1. The new tax reform bill will impact the market.
The federal government recently passed The Tax Cuts and Jobs Act, majorly overhauling the tax code. While it’s unclear how this will affect the real estate market as a whole, there are several changes affect the home seller. As a result of the changes made to the tax code, the National Association of Realtors now projects slower growth in home prices in 2018, with an appreciation rate of 1% to 3%. By doubling the standard deduction, Congress has reduced the value of mortgage interest and property deductions as tax incentives for homeownership. However, no changes were made in the rules surrounding capital gains for home sales, which is a major victory for home sellers.
2. Buyers are ready
Tired of the “slim-pickings” buyers are ready and optimistic about finding a home. They recognize home prices aren’t slowing down and with the recent growth of job creation, income and stability, buyers are looking to take advantage of the current mortgage rates which are still historically low.
3. Housing Inventory is still extremely tight.
There is limited housing supply in San Diego and we aren’t seeing new construction keeping up with the demand. The total amount of homes on the market fell 10% year over year in the last quarter which is the most significant drop since 2013. With less inventory of homes = high price and fewer days on market. Home prices have increased over 6% since last year and new construction is still way behind.
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