New Tax Rules Coming Soon!
Posted by Steve Fingerhut & Paige Fingerhut-Charnick at Jan. 24, 2018
Tax Reform Law Chart: Prior Law vs. New Law
Provisions of Interest to Real Estate Professionals
ITEM |
PRIOR LAW |
NEW LAW |
Mortgage Interest Deduction |
Capped at $1,000,000 |
Capped at $750,000 |
State and Local Tax Deduction |
Unlimited |
The total of income, sales and property tax deductions is capped at $10,000 |
Capital Gains Exemption on Sale of Primary Residence |
Exclusion of up to $250,000 ($500,000 if married) of gain realized on sale or exchange of principal residence if lived in for 2 of last 5 years |
No change |
1031 Like-Kind Exchanges |
Applied to all classes of property (e.g., personal and real) |
Limits on non-recognition of gain to real property |
Personal Deduction |
Allowed |
Eliminated |
Standard Deduction |
$6,350 individual and $12,700 if married |
$12,000 individual and $24,000 if married |
MID for Second Homes |
Capped at $1,000,000 |
Capped at $750,000 |
Home Equity Loan Deduction |
Capped at $100,000 |
Not deductible unless the proceeds are used to substantially improve the property |
Moving Expense Exclusion and Deduction |
Deduction for moving expenses incurred in connection with change in work place |
Eliminated except for members of armed forces on acctive duty that move pursuant to military officers |
Child Tax Credit |
$1,000 for each child |
$2,000 for each child |
Deduction for Qualified Business Income of Pass-Through Entities including independent contractors |
None |
20% deduction of taxable income phased out above $157,000 ($315,000 if married) for brokerage services |
Depreciation Recovery Period for Real Property (Residential Rental) |
Recovery period is 27.5 years |
No change |
Depreciation Recovery Period for Real Property (nonresidential) |
Recovery period is 39 years |
No change |
Depreciation Recovery Period for Real Property (leasehold improvements) |
Recovery period is 15 years |
No change |
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