Boston Midtown high rise condos
Let’s start off with the good news.
Taxes when you Sell your Boston high rise condo
No change in this respect. Boston Midtown high rise condo owners who have lived in their property as their primary residence for two out of the last five years still qualify for the full tax exemption, up to 250,000 profit (gain) on the sale for an individual, or 500,000 profit (gain) on the sale if filing jointly. See IRS website for full details. This tax deduction was threatened but did not change. Of all the proposed real estate tax changes, this one was the most concerning to me and I was thrilled when it was removed from the bill and no changes were made to the current tax deductions when a homeowner sells their property.
Now for the sort of bad news.
2018 Mortgage Interest Deduction
Mortgage interest on purchase loans are still deductible up to a $750,000 loan. This is not the purchase price, this is the loan amount. This will affect Boston luxury home buyers in our area, but not the average home buyer. Many luxury home buyers also do not apply for loans that big because they already have planned on having significant down payment amounts.
What will affect the average homeowner in our area is the loss of the interest deduction available for any home equity lines. This tax deduction looks like it will disappear altogether and there is no “grandfather” clause, meaning your current home equity line will lose that tax deduction.
Now for the bad news.
New 2018 Tax Deduction Cap for Property Taxes
The bad news here is not simply that your property tax deduction limit will be capped at 10,000. This would affect plenty of Boston high rise condo owners in our area. The really bad news here is that your state property tax and your total income state tax deductions are combined in the cap and together cannot exceed $10,000. It seems likely many homeowners will lose out on state tax income deductions or property tax deductions because of this change.
How will the 2018 tax bill affect the Boston real estate market?
They won’t. In my opinion, the changes are not good for the Boston real estate market but the changes are so marginal, I do not expect it to alter the local Boston real estate market projections at all. Other forces like population gain, available home supply, job growth, and mortgage interest rates will have a much greater impact on the Boston luxury condo market in 2019. The tax changes will have little to no impact in comparison with these data points.