The new tax reform bill that passed just before the New Year will likely have an impact on many taxpayers and industries.

darren-nolander-tax-reform-featuredWhether that impact will be positive or negative is still debatable. It will also vary person to person and situation to situation.


Here are a few ways it may impact the mortgage and housing industries – and how we can use this reform to benefit our clients.

State and local mortgage deductions are limited to $10,000.

This could cause secondary homes in states known for high costs and high taxes to come back onto the market. These states may include California, New York, New Jersey, Connecticut and Maryland.

The good news: We’ve had a supply-demand imbalance for some time now, as homebuilders just haven’t been able to produce homes at a rate that will satiate buyer demand. Additional inventory could spell big opportunity for many buyers who may have been waiting on the sidelines. More supply may also mean a drop in prices or comps, which once again could spell a windfall for patient investors.

The average American, according to Pres. Trump, will receive a $4,000 “pay raise.”

This additional disposable income may allow homebuyers to look at more expensive homes and possibly qualify for larger loans.

The good news: more money, more house, more loans. This one doesn’t really warrant further selling points.

The cap on principal for interest deductions on new mortgages has been reduced from $1 million to $750,000.

Economists at Goldman Sachs told HousingWire that the new reform may cause house price appreciation to temporarily slow from its strong 6 percent showing in 2017.

The good news: Goldman Sachs believes lower-priced markets will remain unaffected. More expensive markets may experience this slowing, but while it may be disappointing news to current owners, it may turn out to be a positive thing for many in this country as we have a huge affordability problem.

The standard deduction has doubled to $24,000 for married couples.

The good news: Once again, this is an easy one. The housing market always stands to benefit when consumers pay less, save more and wind up with a larger amount of money in their pocket than they would have had previously.

Home equity loan interest is no longer deductible.

The good news: It’s never great to hear a deduction that was relevant to you no longer exists. However, this could spur conversations about affordability, longevity, refinancing, and whether now is the time to get out of a current situation and into a new phase of life.

Current and potential clients are likely to have questions as the 2017 tax season gets underway and people start thinking about the implications of new legislature. Arm and educate yourself about the basics affecting your industry to continue to serve as a trusted source of knowledge within your community.

Regional Vice President - Southwest

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