Real Estate Related News: The One Big Beautiful Bill Act, the comprehensive tax and spending bill passed on July 4th, includes an update on several real estate related provisions; here are two I want to focus on for now. SALT Deduction Cap Increase – State And Local Taxes were previously capped at $10,000 for qualified households. But with the OBBBA, the SALT cap jumps 400% to $40,000/year for households making under $500,000 AGI. This is important because real estate taxes for many of us in California far exceed $10,000, not to mention state income taxes. So when you buy that house and have a big property tax bill, now up to $40K can be deducted against your income. Talk to your tax professional for more details, but this should make us Californian’s a little happier the next time we do our taxes.
The second real estate related topic with the OBBBA is the 100% Bonus Depreciation for real estate investors. Instead of capitalizing improvements such as new appliances, kitchen remodels, landscaping, etc over several years, investors that improve their properties can now deduct the entire improvement (not structural) in the first year of use. If you hold your rental properties for a long time, or even if you want to trade out on a shorter term, the 100% bonus depreciation allows you to get a quicker return on your investment. Again, talk to your CPA as “depreciation recapture” is an important concept to understand when you sell, but overall this is a huge bonus for real estate investors.
Here’s one. How about no capital gains on the sale of a personal residence? Yes, wouldn’t that be amazing! Well, U.S. Rep. Marjorie Taylor Greene (R-Georgia) introduced the No Tax on Home Sales Act, a bill that would eliminate the federal capital gains tax on the sale of a primary residence. It still has a long way to go before becoming a reality, but learn more about this proposed act here.
