The new tax bill is expected to be signed by the end of the year. Here is a summary of what it means for your real estate…
The new tax bill:
- Retains the current law for exclusion of capital gains on a principal residence. You still need to live in a home for 2 of the last 5 years to claim a capital gains exclusion. There was a risk that this would be changed to 5 of the last 8 years, but thankfully it did not.
- Reduces the limit of deductible mortgage debt from $1 Million to $750,000.
- Retains the ability to deduct mortgage debt on second homes.
- Allows for an itemized deduction of up to $10,000 for property taxes. When the bill was first introduced, there was no allowance for a property tax deduction.
- Retains the current 1031 like-kind exchange rules which is terrific news for investors.
A story ran this week which highlighted the number of people who have moved out of Colorado.
Let’s get real, there are still a large number of people moving to Colorado.
In fact, 223,000 moved to Colorado from another state last year according to the latest American Community Survey from the U.S. Census Bureau.
The net migration into our state (after subtracting out people who left) was 30,859 people.
In Northern Colorado the net migration looks like this:
- Larimer County = 7,001 people
- Weld County = 7,117 people
So what does that mean for housing? Knowing that, on average, 2.5 people live in each household, the number of new housing units required for these new residents looks like this:
- Larimer County = 2,800 new housing units
- Weld County = 2,847 new housing units