With the new rule, however, the deductions can be around 750,000$ in the debt. The interest, as well as home equity loans and credit, would be deducted, but only if the funds were used for home improvements and other means of renovating the house. Only those that would end up maximizing their limits in the tax paying process would be the home-buyers and homeowners that are high-end in the market. Those with multiple mortgages to pay would have to as well.
A question then arises due to this new rule: how would these deductions affect the more high-tax marketplaces such as New York and New Jersey? As well as California?
For the buyers, it may seem that they wouldn’t cave in into buying a new home in those areas or even choose other options such as a smaller home when the calculations of the payment would still be much even in the non-deductible taxes that they need to pay.
If anything, the market would be at a soft spot at the moment because of these reasons compared to the rest of the country alone as these caps can hurt many homeowners.
The Bottom Line
For the sellers, then the prices would need to be at a realistic range in order to sell. Be prepared to cut the listing prices in order to seal the deal on the selling house. The sellers would also need to more open-minded and ready for competition, especially when it comes to the more expensive properties.
For the buyers, going slow on the deals are alright at the current state of the housing market. Since there are barely any competitive prices and hot markets overall, the buyers can take their time towards getting the desired home that is well around their budget.
Rana Khanjani, MBA
San Fernando Valley Iranian-American Real Estate Agent
Providing Services in English and Farsi
Address: 22020 Clarendon St. 200, Woodland Hills, CA 91367