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.