Thursday, December 28, 2017 / by Christine Andreasen
There is a new tax plan. How exactly will this tax plan impact homeownership and the Seattle real estate market?
How will the new tax plan impact the Seattle real estate market?
There are a lot of things to address in this tax plan, and I’m going to cover a very narrow segment today. I’m not interested in getting into the politics of it, but there is a valid question to address here: Will this tax plan negatively affect the Seattle market?
If you check out the video above, you’ll see a graph that I borrowed from SeattleBubble.com. This is a great blog to follow if you are interested in the ins and outs of Seattle real estate.
In the current plan, after you get to $200,000 in homeownership, it makes sense to itemize your taxes. Itemizing allows you to pay less than the standard deduction.
In 2018, it doesn’t make sense to itemize your taxes until you get to $500,000 in homeownership.
As you will see in the graph in the video, at no time are you ever paying more taxes as a homeowner. This bill does in fact cut your taxes.
The complaint here is that the amount you need to spend before itemization makes sense has been doubled. In a way, this plan removes the incentive to buy a home.
While that is true, it should not impact the Seattle market because there are very few homes available under $500,000 anyway. It still makes sense to buy a home and pay less taxes by deducting that mortgage.
Another major complaint is that this is a tax break for the rich, which is demonstrated by the graph in the video. The more expensive your home is, the less you will have to pay in taxes. Some people have a problem with that, but it is the state of affairs with this new tax plan.
Ultimately, this is not a tax hike on homeownership, and you will pay less in taxes on your home across the board. The tax bill will not negatively impact the Seattle market because there are not many homes available under $500,000. You need to own a home that is $500,000 or more in order to itemize your taxes and get a larger deduction than the standard deduction.
If you have any questions, just give me a call or send me an email. Again, I highly recommend subscribing to the Seattle Bubble real estate blog. They do some great work over there.
In the meantime, have a happy New Year and I’ll see you in 2018!