To buy or not to buy? New tax law creates uncertainty for some homebuyers
By Jeff Collins
Steve Jenner and his wife were planning to buy a home near the house they’re renting in Dana Point, where properties typically sell in the $1.2 million to $1.5 million range.
But in December, just as Congress was voting to pass a new tax law limiting real estate-related deductions, the Jenners backed out and renewed their lease instead. They may not be able to afford to buy a home under the new tax law, Jenner said.
“The deduction on your taxes won’t be there anymore,” said Jenner, 50, a sales executive for a biotech firm. “That increases my cost to own because I’m not getting that benefit.”
Throughout Southern California, potential homebuyers and their real estate agents are trying to assess how tax cuts President Donald Trump signed into law Dec. 20 will impact housing.
Some are pulling out of the market, local agents say. Others are in a holding pattern and some home shoppers said they plan to buy out of state where the tax consequences won’t be as great.
There also are forecasts showing California house price increases won’t be as big as they would have been before the tax changes.
But interviews with economists, mortgage brokers, accountants and agents show there are just as many who think this is no big deal. The brouhaha will die out, they say, once the industry adjusts to the new reality.
“Every time these new laws are passed, there’s panic. Then it ends up being nothing,” said Blake Roberts, CEO at Pier to Pier Brokers in Hermosa Beach. “Death, divorce and desire keep happening, and people still have a need to buy real estate.”
Three key provisions
After weeks of dueling proposals and constant revisions, the final tax bill ended up with three key provisions affecting homebuyers: A lower cap on mortgage interest deductions, reduced state and local tax write-offs […]