Tax Reform

If you have any questions on the new tax reform laws and changes, we highly suggest meeting with your CPA as it is very important to your future. We felt there were a few notable real estate changes worth mentioning here. The first one is that the owner-occupied capital gains law did not change. When a single person lives in their home as a primary residence for two out of the last five years, they are tax exempt up to a $250,000 capital gain. For married couples, they are exempt up to a $500,000 gain. It was proposed as part of the tax reform bill that the capital gain exemption would require the homeowner to live in their primary residence five out of the last eight years, but it did not pass. A second notable real estate change is that State of CA income tax is now only deductible up to $10,000 per year, which includes property taxes. Write-offs for loans have also been limited to $750,000 or less. For example, if you get a new loan for $1,000,000, you can only write off the interest based on $750,000 of the amount. As always, please consult your tax professional to verify this information.