With the Trump Administration signing their tax reform legislation just before Christmas, many current and future homeowners wonder what the impact on their tax bill and deductions will be.
In a nutshell: Emeryville has a median home price ranging between $500K – $600K in 2017. The tax reform will have the biggest impact on homeowners that carry a loan of $750K and higher. Most homes in Emeryville are of course condominiums and townhouses and tend to be below that threshold.
Here are the main changes and the effect on homeowners:
- Mortgage Interest Deduction
The decrease of the mortgage interest deduction will affect all home owners with a mortgage higher than $750,000. Old deduction: Deduct interest against $1,000,000 in mortgage debt.
New deduction: Deduct interest against $750,000 in mortgage debt.
- Home Equity Line Interest Deduction
This change will affect everyone with a home equity line. Old: Interest on home equity lines are tax-deductible up to $100,000.
New: Home equity lines are not deducible.
- State and Local Tax Deduction
This will have a huge impact, since it includes real estate, personal property and state income tax.
Old: No cap.
New: Capped at $10,000.
- Standard deductions
The amount for standard deductions doubled. This is potentially off-setting the loss in deductions for mortgage and interest rates.Old: Single filers $6,000 and married filers $12,000.
New: Single filers $12,000 and married filers $24,000
Many ask: should I prepay my property taxes? Taxes can be prepaid, if assessed. I hear conflicting information on it. Ultimately, consult your CPA to get advice.
National Association of Realtors Summary →
Nerdwallet Blog →
And now to the November market snapshot in Emeryville: the market slowed down significantly. It seems that, in addition to the holidays, people adopted a ‘wait and see’ approach.
By The Numbers:
Types of Homes Sold:
The number of homes sold for November decreased from 20 to 8.
Studios & 1 Bedroom Homes:
The number of 1 bedroom and studios sold decreased from 11 to 6.
2 Bedroom Homes:
The number of 2 bedroom homes sold increased from 9 to 2.
3 Bedroom + Homes:
There were no single family homes sold in November.
Median Sales Price vs. Median List Price:
Both Median Sales price and Median List price decreased in November with the sales price dipping from $571K to $506K and the list price dropping from $536K to 496K.
Average Days on Market:
The Average Days on the Market for Emeryville homes increased from 24 to 33.
Sales By Location:
For purposes of identifying sales by location, we have divided Emeryville into four geographic areas.
North Emeryville: 6 Homes Sold.
South Emeryville: 2 Homes Sold.
East Emeryville: 0 Homes Sold
West Emeryville: 0 homes Sold
Further insights or shopping for an agent?
Email East Bay Modern REALTOR® Nicole Gruen→.
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The increase in the standard deduction will have the most profound impact in Emeryville. A married buyer earning $100k putting 10% down on a $500k primary residence with a 4%, 30-year fixed loan would will pay ~1,500/mo in interest, and the marginal tax benefit of the deduction (at a 35% marginal tax rate) would be $520/mo. Increasing the standard deduction would moot this benefit. This reduces the rational willingness to pay by $109k assuming the prospective buyer was previously deducting more than the $12,700 standard deduction but less than $17,750.