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You are here: Home / Homeowner Tips / Five Things to Know About California’s 2018 Tax Bill

Five Things to Know About California’s 2018 Tax Bill

January 10, 2018

Trying to sort out the key takeaways from the new tax bill?  Here are some of the important changes you should be aware of.  Contact us to discuss how the new tax laws may affect those of you who already own real estate or plan to purchase real estate in the new year.

California 2018 Tax Bill

1.Capital gains exclusion. In a huge win for current and prospective homeowners, the current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home.

2. Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit on primary and secondary homes.  Filers who have mortgages issued before the Dec. 15, 2017, cutoff would be grandfathered in, and will still be able to deduct interest on up to $1 million of mortgage-related indebtedness.

3. State and local tax deductions (SALT). Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Under current tax law, there is no limit on how much state or local taxes can be deducted from your federal taxes.

4. Interest on Home Equity Lines (HELOCs):  Interest paid on home equity loans that aren’t considered home acquisition debt will no longer be tax deductible under the tax plan. Currently, homeowners can deduct interest on up to $100,000 of such indebtedness.

In the past, Americans have used their home equity to get low, tax-deductible interest rates on large purchases, even if they weren’t housing related. For example, one might use a home equity line of credit (HELOC) to purchase a luxury recreational vehicle at a cost of $100,000. Thus, the homeowner scores a lower interest rate (HELOCs are one of the least expensive ways to borrow money) and get the ability to deduct the interest from their taxes. The new tax plan closes this “loophole” for using home equity as a cheap source of consumer financing.

5. Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities.

If you’re unsure of how these changes will affect you or the purchase of a home in 2018, give Danny a call at 949-413-6967.

Filed Under: Homeowner Tips, Real Estate Laws

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Basement homes don't come up too often here in OC, Basement homes don't come up too often here in OC, but we can find them when they do!

If you're looking for a home with an extra living space, DM us and we'll start the search!

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219 Chaumont Circle, Foothill Ranch

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The real estate biz never stops, not during vacati The real estate biz never stops, not during vacation and definitely not on weekends and evenings. Check out this funny video depicting a Day in the Life of Danny Murphy

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Jazz anyone?!?!? Jazz anyone?!?!?
Buying and selling real estate is a big deal. It's Buying and selling real estate is a big deal. It's a big commitment. Watch Danny's video to learn more about the buying process and why 98% of buyers have a buyer's agent! There is usually large sums of money involved in the process. Sometimes it can be quite emotional, stressful and confusing. There are lots of contracts, forms and addenda to complete or/or review. Many decisions to be made about what to buy and where. Am I paying a reasonable price, and getting reasonable terms besides just the price. How do I make a strong and competitive offer without overpaying? How is my earnest money deposit protected? Maybe you have unique financing needs or just want a second opinion from a reputable lender? What inspections should we do and why? Based upon inspection results, do we ask for repairs or a credit, maybe a price reduction or a combination of some or all? What if during escrow there is an issue with title, or you are having a hard time obtaining homeowner's insurance (as that is a BIG challenge these days), who do you go to? Now it's finally time to move! Maybe you need a good moving company, or you want to do some repairs and improvements after you move in. Who has a good roofer, electrician, plumber, general contractor, painter, flooring and window person, etc? You get the point.....there are a LOT of things to consider, account for and do when buying a home and that is where an experienced and highly skilled real estate agent comes in and helps you through the process. Please reach out to us anytime for all of your real estate questions and needs. We're here to help!

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Is your little one's artwork taking over the fridg Is your little one's artwork taking over the fridge (and everywhere else!)? Maybe it's time to find a home that grows with your family! 

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Perhaps you have heard, but if you haven't, there Perhaps you have heard, but if you haven't, there have been some big changes in how real estate agents MUST conduct their business with all clients and potential clients. Watch Danny's video to learn about the mandatory forms that consumers will be asked to sign before seeing properties for sale or making offers. Please reach out to us anytime for all of your real estate questions and needs. We're here to help! 

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