New Tax Law and Home Purchase

From Forbes.com

By Karl Kaufman

[…] After digging deeper into the new law, I came across some surprising information that stands to benefit homebuyers in a specific income range.

Confusion surrounding the recently passed Tax Cuts and Jobs Act (TCJA) is widespread in higher local tax states like California and the Northeast. While many buyers are postponing the purchase of a new house this season, waiting until 2019 to find out what is owed in taxesfor the 2018 tax year could be a mistake.

Between changes to the Alternative Minimum Tax (AMT) and the change in deductions for State And Local Taxes (SALT), potential homebuyers may stand to benefit more from the tax law by purchasing a house before the end of the year.

Though much was made of the SALT limit by politicians and the media, doubling of the standard deduction and increased deductions for childcare might offset the $10,000 SALT deduction limit for many homeowners.

Evan Roberts, a real estate agent and founder of Dependable Homebuyers in Baltimore, Maryland says you don't want to be the one subsidizing loans for other buyers. "Now is the best time to buy a house despite the $10,000 limit on SALT deductions," he said. "Interest paid on your mortgage is still deductible and most individuals will find that they are under the limit and are still able to deduct their property taxes. With rising interest rates it is critical to lock-in a lower monthly housing expense, especially if you make over $100k a year.

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