[quote=SK in CV][quote=flu]
For rental properties, doesn’t mortgage, property tax, and just everything else count on as cost of running your rental? So none of that changes right?[/quote]
Yes, but. None of that changes, but it doesn’t mean the value of your properties are unchanged. If you own single family residences as rentals, they’ll sell based on what other single family residences are selling for, not based on ROI.
The value of multi-unit rentals may go up with this tax change. Lower taxes on passive income can increase ROI.[/quote]
I’m not so convinced all these tax increases, as annoying as they are, are really devastating.
First of all, for many people, mortgage interest deduction a primary isn’t going to be affected. The only ones affected are those new buyers that take out a mortgage larger than $500k. Old mortgages are grandfathered, right? I mean, are there many folks taking out jumbo loans these days? Maybe. I don’t know. Second, property tax is now capped at $10k. CA property tax is roughly 1%. So this only impacts people with an assessed value more than 1 million. I’m sorry, if you own a $1.5 million home, and are in a financial disarray because you can’t deduct and extra $5000 in property taxes for the entire year, and you weren’t already bending over in AMT, you got much bigger problems to worry about.
That leaves state tax deductions. Maybe I’m missing something. But lets just say someone’s AGI is $200k. State income taxes, 10%. So that’s an extra $20k taxable income versus last year… Tax rate of say 39% (which is probably much higher than what it is actually), that’s like $7800 extra taxes… Yes, it’s a painful check to write…But for someone with an AGI of $200k, is this really going to drastically affect one’s well being? I mean, these were the same arguments at one point said to some of us a few years ago too.
Again, don’t get me wrong, I think Trump is horrible, and the GOP has gone off a deep end, and this tax “reform” is ridiculous… I’m just not not seeing how this tax “reform” is going to be as doom and gloom as people make it out to be. It’s painful and annoying at worst imho.
So this might affect a handful of would be buyers who no longer have the budget to buy a SFH …. Ok, that sucks. Doesn’t this keep rental demand (and therefore rent prices) high? Doesn’t this create a floor for how far home prices may fall, given that if it’s cheaper to own than rent, people will buy?
And I’m only talking about these folks whose AGI is at this level… Not the folks that make much less, which I would agree get hit harder….No question about that.
