Here’s a recap of the latest tax bill approved by Congress that effects real estate.
Last-minute changes to the bill:
- Capital gains exclusion. In a huge win for current and prospective homeowners, 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.
- 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.
- State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000.
- 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.