Impact of new tax bill (Forbes article)

[Caleb Heimsoth]

Here a good article by Forbes that breaks down a lot of the new stuff in the tax bill. It clearly mentions real estate at least twice. The author argues that those who sell real estate could be adversely affected because they’re eliminating or capping most deductions like property taxes and interest. And for live in flips you’d have to live there 5 out of 8 years to get the capital gains exclusion. On the flip side it looks like rental property owners are winners as they can take depreciation faster and get to deduct 23 percent of qualifying income. So it depends on what part of real estate you’re involved in to know how this would affect you. https://www.forbes.com/sites/anthonynitti/2017/12/02/winners-and-losers-of-the-senate-tax-bill/#662579f6254d

[Vlad K.]

@Caleb Heimsoth The limitations would apply to personal only. For real estate investors there would be no limitations.

@Steve Vaughan There are areas of the country where middle and upper-middle class will be affected negatively, where new standard deduction is not going to cut it. In addition, the double standard deduction is a scam, especially for families with children. If you pay close attention to your tax return, you get two deductions (currently) - 1) standard or itemized and 2) personal exemptions. 

Just to put it in perspective, say for a family of four:

 - 2017 standard deduction $12,700 

 - 2017 personal exemption is $4,050 x 4 =  $16,200

So, right now, at a minimum, a family of four gets a deduction of $28,900, which will be replaced by $24,000, as personal exemptions are eliminated.

Moreover, most families who own a house and living in states with income taxes do itemize. Taking a modest house purchased at $300k, mortgage interest is about $10k-$11k / year (relatively new purchases). Add real estate taxes and state income taxes, and for many families itemized deductions are north of $20k.

Without going into many more details:

 - winners: single, and families who do not own a house

 - losers: families who own a house

There are exceptions in the categories above, so this is just a broad generalization.