Friday, April 13, 2018

It's mid-April again...Did you Buy a House Last Year?

Yes friends the dreaded tax arrives yet again. Now if you bought a house for the first time, last year you very well may be able to itemize deductions and save money. If you bout the house in the second half of the year, you may not have paid enough interest of offset the Federal standard deduction. But it is always wise to consult a tax pro before prepping your taxes.

This year a new tax system is in play and it may remove the need to itemize for some home buyers. The $24,000 standard deduction for a married couple is enough to wipe out all the interest paid in the first year of a $425,000 mortgage at 4.5% with about $5,500. So one would need to have an additional $5,600 in deductions beyond the mortgage for itemization to really help.

In my opinion one rarely should buy a house strictly for tax purposes unless the house is a investment property. To real value in home ownership is gaining equity value over time by reducing principle and market appreciation. This helps people build wealth over time and is a cornerstone to the American way of life.

So with all that taxes and building wealth set, how about the market?

The local MLS just released it's data for March and it looks like inventory is just about as tight as it was last year this time. Rising interest rates could initially get some fence sitters to jump in while rates are still low, but eventually it will lead to fewer buyers. This is primarily why many analysts feel 2018 real estate prices are likely to rise more slowly than last year. Buyers will be helped by a little less competition.

I will be diving deeper into the data to look for opportunities for buyers and sellers over the next week. 

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