Tax Reform: What Does it Mean for You?
Tax Reform has been talked about in the news, online and around the water cooler for many months now, but what exactly does it mean? Well, I am no CPA or Accountant, but I will highlight a few points about it and how that may impact Arizona Real Estate, specifically Phoenix Real Estate.
- First Major Reform since 1986.
- Changes are to take effect for the 2018 tax year, not 2017.
- Corporate Tax Rate is being lowered from 35% to 21%.
- Many believe this will lead to some higher wages and more spending back into the economy, which could ultimately help housing.
- Same number of tax brackets will apply.
- However, for the majority of them, the percentages will be lowered for less taxes being paid.
- Medical Expense & Child Deductions expanded in many scenarios.
- State & Local Tax Deductions capped @ $10,000.
- This may impact other areas of the country more so than here locally due to our generally low property tax amounts.
- Mortgage Interest Deductions changed.
- This will impact other regions mainly, but some in the luxury market here as mortgage interest will only be able to be deducted for new loans up to $750,000 down from the $1M mark.
- The standardized deduction nearly doubles.
- This will make some no longer need to itemize on their returns.
All in all, it is not believed to be a real harm to the Phoenix Real Estate market, but it could affect other parts of the country differently. It’s here so my best advice is to hire a good, reputable CPA or Accountant to ensure your taxes are being filed properly.