How the 2017 Tax Bill Will Affect Homeowners

how-the-new-tax-bill-will-affect-homeownersIntroduced at the end of 2017, the Tax Cuts and Jobs Act of 2017, commonly referred to as the “tax bill,” saw widespread support and condemnation from both sides of the political aisle. Those in favor of the bill saw it as a necessary piece of legislation that would help spur economic growth, and increase in jobs and investments. On the other side, critics saw it as an attempt to unravel social safety programs.

Political stance aside, however, there is one cohort who is wondering how this new law will affect them: those interested in buying a new home. As a December 2017 article in Curbed explains, there are a number of considerations that prospective homeowners should keep in mind as we move forward into the new year.

First-Time-homebuyers-using-an-IRA-photoHow Prospective Homeowners May Be Affected by the Tax Bill

Of course, the 2017 tax bill won’t only affect prospective homebuyers throughout the country. Rather, the bill includes myriad provisions that ultimately affect every single American. But, one of the ways the tax bill will affect prospective homeowners is by capping the mortgage interest rate deduction at $750,000 (down $250,000 from what it was previously). This means that new homebuyers will be able to deduct interest on the first $750,000 of their mortgage debt, as opposed to the first million. This new change would apply to both first and second home purchases.

But will this new cap in deductions affect all prospective homebuyers? Definitely not. The median home price nationwide is currently about $254,000. So unless you are shopping for homes in San Francisco or another expensive market, the new deduction limit shouldn’t be a problem generally speaking.

Hayden Homes is proud to offer some of the most elegant, modern and exciting new homes in the Pacific Northwest where the housing market is booming and the cost of living is great. Take Idaho for example. The cost of living in Idaho is far more favorable than it is in California. Consumer prices, restaurant prices and grocery prices are all between 18-59% lower in Boise, ID than in Los Angeles, CA. And while Idaho may not offer ocean views and palm trees, there’s a plethora of glistening rivers and lakes, mountain views, outdoor recreational opportunities. That’s enough reason to start packing your bags today!

Are You Searching for a Home? 

If you’re looking to maximize your dollars in a new home, consider one of the many brand new, never been lived in before, homes in the Pacific Northwest by Hayden Homes. Searching for your dream home starts right here. Don’t hesitate to reach out to our committed Community Managers today. We offer affordable, attractive and top-quality homes for sale in Idaho, Oregon, and Washington, and they can’t wait to help you find the best option for you, for whatever stage in life.

Tax Breaks Every First-time Homebuyer Should Know About

Did you know that every year, there are changes made to the tax code? That means that if you are planning to buy a new home in 2017, the tax breaks that apply to you could differ from previous years’ rules, and certainly rules in the future. Here are some tax breaks that every first-time homebuyer should know about.

Tax Benefits for buying a new home - Hayden Homes1. You Can Deduct Your Home Mortgage Interest

One of the biggest perks of being a homeowner is that you can deduct your home mortgage interest. Because home amortization works by applying the highest ratio of interest to principal to your first payments, the home mortgage interest deduction is something that homeowners especially benefit from during their first year of owning a home.

2. Penalty-free Withdrawal from IRA Savings

You may know that if you withdraw funds in your IRA before reaching retirement age, you will have to pay an early withdrawal penalty. However, did you know that this penalty can be bypassed if you dip into your savings for the purpose of acquiring funds for a down payment on your first home purchase? That’s right – you can take a certain amount (consult your local Loan Officer for specific dollar amounts) from your IRA to put towards your down payment without being penalized for the withdrawal. Bear in mind, you may still have to pay taxes on it.

 

 

3. Home Improvement Tax Breaks

Do you need to make improvements on your home? If so, you should consider taking out a home equity loan to do it. When you use a home equity loan to finance improvements, you can deduct the interest on this loan just as you can deduct your mortgage interest.

4. Local Property Tax Deductions

When you buy a new home, you will have to pay property taxes on that home. You are allowed to deduct any of the real estate taxes paid to the taxing authority when filing your taxes. You can refer to the website of the IRS for more information about exactly how to do this.

5. Mortgage Interest Credit

Another tax benefit that first-time homebuyers can take advantage of is the mortgage interest credit, which is different than the mortgage interest deduction benefit. The mortgage interest credit directly counts against your tax bill, and allows you to claim 20 to 30 percent of the interest you pay every year back as a straight credit on your taxes.

Look to Hayden Homes to Find Your Brand New Home Today!

Buying a new home is a large expense, but it can also serve a number of financial benefits, too. If you have been thinking about buying a new home but aren’t sure if it’s the right decision for you, we have written a number of blogs regarding zero-down loans, costs of a new home, and more. To learn more about Hayden Homes, the benefits of a brand new home, and how we can help you to secure financing, contact us today! When you choose Hayden Homes, we help you find your dream home in Idaho, Oregon, Washington, and all throughout the Pacific Northwest!

***UPDATE***
With the recent changes to the tax laws that were past at the end of 2017. These will affect your taxes and what you can deduct beginning in 2018, therefore, we highly recommend that you consult your local Tax Accountant for specific items that you can take advantage of as a homeowner.

We talk about a few of them in our Blog on How the 2017 Tax Bill will affect homeowners.