Now that the Tax Bill has been passed we know what the real estate related changes are and can better judge what if any impact these will have on the Salt Lake Real Estate market. The changes passed in the bill are not as bad as they could have been but are still worth considering.
Cap on mortgage interest rate deductions falls from $1,000,000 to $750,000. This rule is only for new mortgages. Also, Individuals who take out home equity loans will no longer be able to deduct that interest under the new bill. Given the median home price of just over $300,000 in Salt Lake County the $750,000 cap would appear to have limited impact. This is more likely to impact people who own 2 homes, or those people thinking of buying a second home, or thinking of taking out an equity loan.
The state and local tax deduction (which includes property taxes) is capped at $10,000. Again, the number of people who currently pay more than $10,000 is limited and so we would expect the impact to also be limited.
While the above changes do not appear to have much impact on the local Salt Lake Real Estate market (although only time will truly tell) and are more likely to impact the more expensive local tax and property value states like California and New York, there are some other concerns.
The main concern is an indirect impact of the doubling of the standard deduction from $12,700 to $24,000 for married couples and from $6,350 to $12,000 for individuals. Before these changes it is estimated that 44% of home owners (in the U.S. not a Utah stat) had a home which was worth enough to justify itemizing their tax return and after the change only 14.4% are worth it (study results by Zillow). In other word’s the change removes one of the incentives to owning a home, to get a break on your taxes.
* Note I am not a CPA and information in this article should not be used as tax advice. You should consult a qualified CPA regarding your individual tax situation.