Category: Uncategorized

By Susanne Dwyer

A new year has started, and with it a newly enacted tax policy: the Tax Cuts and Jobs Act. While most changes will not be noticeable until consumers file their taxes in 2019, the new tax law stands to alter how consumers view homeownership incentives and could impact real estate markets across the country. Additionally, many consumers, but not all, may see a change to their paychecks by next month due to the new tax rate deductions. These are the biggest real estate-related tax policies and how they could affect homeowners.

1. Cap on Mortgage Interest Deduction
The Tax Cuts and Jobs Act reduced the limit for the mortgage interest rate deduction for new loans starting Dec. 15 to $750,000. Loans that were taken out before this date are grandfathered into the previous tax policy, which featured a $1 million cap on the deduction. Homeowners can refinance their existing mortgage balance up to $1 million while still being able to deduct the interest—the new loan cannot exceed the amount of debt being refinanced.

“Although only 1.3 percent of all U.S. mortgages are likely to be impacted by the capping of the mortgage interest deduction, it poses a risk to large urban areas with high-priced housing stock,” says realtor.com® Senior Economist Joseph Kirchner, Ph.D. “The No. 1 area with the greatest risk to its home prices and sales is Washington, D.C., followed by California, Hawaii, Massachusetts and New York.”

Some tax experts state that the overall impact of these changes will not be seen until current homeowners sell, in which case the purchased property would come under the new regulations.

“Most estimates suggest that by limiting some buyers’ purchasing power, capping the deduction could contribute to slower home value growth in the priciest communities, moderating the gains longtime homeowners can expect when they do eventually sell,” says Alexander Casey, Zillow Group Policy Advisor.

Related story: More than half (56.7 percent) of RISMedia readers believe the tax bill is not “good for homeownership,” according to a poll conducted Dec. 20-21; 32.3 percent believe it is, however, and 11 percent are “not sure.”

2. New SALT Deduction Limit
In the final bill, taxpayers can itemize deductions up to $10,000 for their total state and local property taxes and income or sales taxes. The cap is the same for both individual and married filers.

“Households that pay more than $10,000 in combined state and local taxes each year will be impacted by the new SALT limits,” Casey says. “On one hand, taxpayers who still itemize deductions and whose total state and local tax liability exceeds $10,000 will get a smaller tax break; however, for other households, the continued availability of those deductions, even if they are capped, may be the deciding factor between whether or not they itemize deductions. This matters a lot in areas where SALT deductions were a relatively more significant reason for itemizing—areas with lower home prices, but higher taxes (e.g., upstate New York, Southern New Jersey, Inland California).”

In the previous law, the SALT deduction …read more

From:: Finance and Economy

By Susanne Dwyer

A new year has started, and with it a newly enacted tax policy: the Tax Cuts and Jobs Act. While most changes will not be noticeable until consumers file their taxes in 2019, the new tax law stands to alter how consumers view homeownership incentives and could impact real estate markets across the country. Additionally, many consumers, but not all, may see a change to their paychecks by next month due to the new tax rate deductions. These are the biggest real estate-related tax policies and how they could affect homeowners.

1. Cap on Mortgage Interest Deduction
The Tax Cuts and Jobs Act reduced the limit for the mortgage interest rate deduction for new loans starting Dec. 15 to $750,000. Loans that were taken out before this date are grandfathered into the previous tax policy, which featured a $1 million cap on the deduction. Homeowners can refinance their existing mortgage balance up to $1 million while still being able to deduct the interest—the new loan cannot exceed the amount of debt being refinanced.

“Although only 1.3 percent of all U.S. mortgages are likely to be impacted by the capping of the mortgage interest deduction, it poses a risk to large urban areas with high-priced housing stock,” says realtor.com® Senior Economist Joseph Kirchner, Ph.D. “The No. 1 area with the greatest risk to its home prices and sales is Washington, D.C., followed by California, Hawaii, Massachusetts and New York.”

Some tax experts state that the overall impact of these changes will not be seen until current homeowners sell, in which case the purchased property would come under the new regulations.

“Most estimates suggest that by limiting some buyers’ purchasing power, capping the deduction could contribute to slower home value growth in the priciest communities, moderating the gains longtime homeowners can expect when they do eventually sell,” says Alexander Casey, Zillow Group Policy Advisor.

Related story: More than half (56.7 percent) of RISMedia readers believe the tax bill is not “good for homeownership,” according to a poll conducted Dec. 20-21; 32.3 percent believe it is, however, and 11 percent are “not sure.”

2. New SALT Deduction Limit
In the final bill, taxpayers can itemize deductions up to $10,000 for their total state and local property taxes and income or sales taxes. The cap is the same for both individual and married filers.

“Households that pay more than $10,000 in combined state and local taxes each year will be impacted by the new SALT limits,” Casey says. “On one hand, taxpayers who still itemize deductions and whose total state and local tax liability exceeds $10,000 will get a smaller tax break; however, for other households, the continued availability of those deductions, even if they are capped, may be the deciding factor between whether or not they itemize deductions. This matters a lot in areas where SALT deductions were a relatively more significant reason for itemizing—areas with lower home prices, but higher taxes (e.g., upstate New York, Southern New Jersey, Inland California).”

In the previous law, the SALT deduction …read more

From:: Real Estate News

By Susanne Dwyer

In the following interview, Tim Haynes, president of American Home Shield® (AHS®), talks about meeting the unique needs of today’s consumer, improving the customer experience, and how one size does not fit all when it comes to home warranties.

Real Estate magazine: Please tell us a little bit about your history.
Tim Haynes: I first came to American Home Shield in 2012 from Nissan, where I led global IT teams. I started as vice president of IT at AHS, then moved over to lead ServiceMaster’s IT organization and strategy and returned in 2015 to take on my current role as president of the company. I’ve also held a general contractor’s license and built homes, which, as you can imagine, has served me well at American Home Shield.

RE: How is your non-traditional background helping to transform the warranty business?
TH: I’m a very hands-on person, and I like to know how things work from the inside out, whether it’s a house, an IT system, a company or anything in between. I enjoy digging into data, mapping out process improvements and using technology in new ways to do things smarter and better than before. I’m not really the kind of person who’s content with the status quo. I’m always looking ahead, and that’s what’s so great about working with the team at American Home Shield. We’re doing some exciting things, especially around improving the customer experience and expanding our service to homeowners.

When I think about the transformation that our own business is going through, I know we’re not just reshaping how we operate and what we offer to consumers; we’re also helping to change the landscape of the home warranty industry for the better.

RE: How does American Home Shield provide an even greater value to homeowners?
TH: Value is a broad term, and it means different things to different people. At American Home Shield, our value is based on many things, especially confidence, convenience and coverage.

Our customers have the confidence that comes with knowing that they’re working with the industry leader—one that has the expertise, the size and the scale that no other home warranty company can offer. They know we’re there for them 24/7/365 and that we have a network of more than 14,000 service contractors to serve our customers, and they have warranty coverage that provides them with valuable financial protection. In the past five years alone, we’ve paid more than $1.8 billion to repair and replace our customers’ covered items. Our coverage is designed to be used. And, when customers use their warranty, they renew at a higher rate than those who don’t, which we believe speaks to the value that we provide.

RE: You work with more than 175,000 agents. How (and why) have you realigned your team structure to be more flexible and responsive to unique needs?
TH: Just like a one-size-fits-all approach doesn’t work in today’s real estate market, it doesn’t work for us, either. The needs of buyers and sellers vary tremendously from market to market, and even among brokerages in …read more

From:: Real Estate News