How the Senate Tax Reform Bill Would Affect DC-Area Homeowners
North Capitol Street looking south. By Ted Eytan.
Just before 2am on Saturday morning, the U.S. Senate passed the Tax Cuts and Jobs Act, a sweeping tax reform bill. As the final version contained several last-minute revisions, UrbanTurf has summarized how the bill would impact current and aspiring homeowners and real estate holders below.
- Rather than eliminating the state and local tax deduction entirely, taxpayers can deduct up to $10,000 in state and local property taxes from their taxable income.
- While the personal deduction is nixed, the standard deduction was more than doubled from $11,700 to $24,000.
- A provision that would have allowed taxpayers to deduct moving expenses has been eliminated.
- The capital gains tax exemption requirements are more stringent. Homeowners must live in their homes for five of the past eight years rather than two of the past five in order to avoid paying tax on the first $250,000 or $500,000 in profit after a sale for individuals or couples, respectively.
- The inheritance tax threshold has doubled to $11 million for individuals and $22 million for couples.
- Under the bill, homeowners can claim a deduction for interest paid on mortgage debt up to $1 million.
- In order to calculate a depreciation deduction for their taxes, residential landlords will be able to divide the value of the structure by 25 years rather than 27.5 years, increasing the annual amount of the deduction.
story continues below
loading...story continues above
One of the primary concerns that the bill posed for the DC area housing market was that a lowered mortgage interest deduction would constrain housing supply even further by discouraging homeowners from moving to more expensive homes and steering prospective homeowners to properties with mortgages under $500,000, an ever-narrowing sector of the market.
The bill still needs to be reconciled with the tax reform bill that the House of Representatives has put forth. As most recently presented, the House bill would include a $500,000 mortgage interest deduction cap, although the majority of the other housing-related provisions in the bill are nearly identical to those put forth in the Senate.
Correction: The point about the capital gains tax provision has been edited to reflect the new requirement that a homeowner reside in their house for five of the past 8 years in order to avoid paying tax on a portion of the gains from a sale.
See other articles related to: congress, house of representatives, mortgage interest deduction, property taxes, taxes
This article originally published at https://dc.urbanturf.com/articles/blog/how_the_senate_tax_reform_bill_would_effect_dc_area_homeowners/13317.
Most Popular... This Week • Last 30 Days • Ever
Back in 2022, the DC Zoning Commission gave the green light to a large mixed-use deve... read »
Opening for sales this spring, The Brownstones at Westbard Square will feature 101 ne... read »
Today, UrbanTurf is taking a look at the tax benefits associated with buying a home t... read »
Donohoe presented plans on Thursday evening for a new multi-family residential projec... read »
Even with two large apartment buildings delivering in Northern Virginia's National L... read »
- Raze Application Looks To Pave Way For 700-Unit Development in Brookland
- Coming Soon: New EYA Brownstones at Westbard Square in Bethesda
- A Look At The Tax Benefits of Buying a Home Through a Trust
- Early Plans Unveiled For 130-Unit Development in Friendship Heights
- 3 Down, 7 To Go: A Look At The Thousands of Units Coming to National Landing
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Start browsing below!
First-Timer Primers
Intro guides for first-time home buyers
Unique Spaces
Awesome and unusual real estate from across the DC Metro