Prior Law vs New Law
What does it mean for you? The chart below gives you a clear comparison of the prior law vs the new law and how it will affect your real estate holdings in 2018.
|
|
PRIOR LAW |
NEW LAW |
| Mortgage Interest Deduction | Capped at $1,000,000 | Capped at $750,000 |
| State and Local Tax Deduction | Unlimited | The total of income, sales and property tax deductions is capped at $10,000 |
| Capital Gains Exemption on Sale of Primary Residence | Exclusion of up to $250,000 ($500,000 if married) of gain realized on sale or exchange of principal residence if lived in for 2 of last 5 years | No change |
| 1031 Like-Kind Exchanges | Applied to all classes of property (e.g., personal and real) | Limits non-recognition of gain to real property |
| Personal Deduction | Allowed | Eliminated |
| Standard Deduction | $6,350 individual and $12,700 if married | $12,000 individual and $24,000 if married |
| MID for second Homes | Capped at $1,000,000 | Capped at $750,000 |
| Home Equity Loan Deduction | Capped at $100,000 | Not deductible unless the proceeds are used to substantially improve the property |
| Moving Expense Exclusion and Deduction | Deduction for moving expenses incurred in connection with change in workplace | Eliminated except for members of armed forces on active duty that move pursuant to military orders |
| Child Tax Credit | $1,000 for each child | $2,000 for each child |
| Deduction for Qualified Business Income of Pass-Through Entities including independent contractors | None | 20% deduction of taxable income phased out above $157,000 ($315,000 if married) for brokerage services |
| Depreciation Recovery Period for Real Property (Residential Rental) | Recovery period is 27.5 years | No change |
| Depreciation Recovery Period for Real Property (Nonresidential) | Recovery period is 39 years | No change |
| Depreciation Recovery Period for Real Property (Leasehold improvements) | Recovery period is 15 years | No change |
Source: https://www.car.org/
