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New Tax Rules Coming Soon!

 

 

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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