I have never claimed to have a crystal ball, but this is the first time in the last 13 years where I feel the need to send out an update right away.
If you missed the most recent newsletter, it was about the exciting world of taxes. At the time of writing the last newsletter, the tax plans that were presented by both the House and the Senate proposed increasing the exemption for capital gains on a primary residence from a required 2 of the last 5 years up to 5 of the last 8 years. No one was excited about that in the real estate world, and we started making some calls.
After a little shuffle, we pulled off a WIN! In the final version, the capital gains exemption was left alone and still requires you to live in your property as a primary residence for 2 of the last 5 years in order to be exempt from capital gains. Score!
Bring on the conversion of a primary residence (for only 2 years!) to future rental (for no more than 3 years) game once again! With the market on the upswing, we can build some real equity!
Unfortunately, we lost a different tax benefit instead. You know how we have talked about Home Equity Lines of Credit (HELOC) in the past? Well, the interest on a HELOC used to be tax deductible. Today, it is no longer able to be written off on your taxes.
That makes me a little sad too, but it might be a blessing in disguise.
Maybe the loss of the HELOC tax deduction will actually cause people to pause for a moment before just taking out more debt on their homes. It’s possible, right? Time will tell.
In the meantime, I hope you all had a wonderful New Years and got to spend time with those you care about. I know I did. But now, it’s time to get back to work and invest wisely… and always with an eye on the future.
Looking for projects? Me too. Let’s look together. Call me at (206) 293-1005 or email Jen@HudsonCREG.com for a quick refresher on where the market it at.
Remember… even though prices are higher than they have been, you make money on the purchase, NOT on the sale. Run your numbers carefully before writing checks. Let’s make this a great year!