Disclaimer: This guide is not meant to be a resource for tax advice but instead a resource for basic information concerning only certain aspects of the new tax code and how they may impact the real estate market. You should get tax advice from your accountant or tax preparer who will explain how the entire tax code will affect your personal return.This information comes immediately after the new tax code became law. Some of the information may be revised as the analysis of the new law evolves.
When the tax code was originally being overhauled by the House and the Senate, there were three major proposals being considered that would have substantially impacted the residential real estate market:
- Changing the requirements for the exclusion of gain on the sale of a principal residence
- The reduction on the limit of the Mortgage Interest Deduction (MID)
- The elimination of the State and Local Tax deduction (SALT) which includes property taxes
Let’s look how the tax code has evolved from the original proposal, and decipher what impact experts believe it may have on the housing market.
1. Exclusion of gain on sale of a principal residence
Original Proposal: Owners would need to live in their house for at least 5 out of the last 8 years to claim this exemption. Under the former tax framework, a typical owner, who has lived in their house for at least 2 years out of the last 5 years, would pay nothing in capital gain taxes if they sell the house.
The New Tax Code: No change. The “at least 2 years out of the last 5 years” requirement is unchanged.
Impact on the Market: None.
2. Mortgage Interest Deduction
Original Proposal: Reduce the limit on the mortgage interest deduction (MID) amount from $1,000,000 to $500,000.
The New Tax Code: Reduces limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans up to $1 million are grandfathered.
Impact on the Market: Assuming a 20% down payment, this reduction in the MID will impact buyers that are purchasing a home between the prices of $938,000 and $1,250,000. Any home under the lower price is still covered and any home over the higher price was not covered under the former tax code either.
What does that mean to the market? Experts disagree. Calculated Risk’s Bill McBride:
“I think the impact of reducing the MID from a maximum of $1 million in mortgage debt to $750 thousand in mortgage debt will have very little impact on the housing market.”
On the other hand, Capital Economics claims:
“The impact on expensive homes could be detrimental, with a limit on the mortgage interest deduction raising taxes for those that itemize.”
3. State and Local Taxes (SALT)
Original Proposal: The elimination of the state and local tax deduction (which includes property taxes).
The New Tax Code: Allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes.
Impact on the Market: Most experts agree that higher taxed regions will be impacted as homeowners in those communities now have a cap on these deductions.
Calculated Risk’s Bill McBride stated:
“SALT will have an impact on housing in some areas. Some people might choose to live in one state over another (if they have a choice), based on taxation. This could impact demand in certain states – especially for the middle and upper-middle class homeowners.”
Mark Zandi of Moody’s Analytics said:
“The impact on house prices is much greater for higher-priced homes, especially in parts of the country where incomes are higher and there are thus a disproportionate number of itemizers, and where homeowners have big mortgages and property tax bills.”
What will be the overall impact on the housing market?
For most of the country, the new tax code will not have a negative impact on the market. As Capital Economics reports:
“Given most households will see an overall tax cut, and potential buyers are likely to put that saving towards their home, we doubt it will have a significant detrimental impact on the housing market.”
There is also no doubt that some higher priced, higher taxed regions will be affected more than others. However, most experts agree that other portions of the tax code will favor the high-end buyer and seller, and this might mitigate many concerns. McBride explains:
“The corporate tax cuts (and other tax cuts) will mostly benefit the wealthy, and this will be a positive for high end real estate.”
What does this all mean to you?
To know for sure, you should sit with your accountant or financial planner and explore how all the aspects of the new code will impact your family.
Most families consider homeownership an essential part of the American Dream, and don’t purchase a home based solely on the tax advantages. The main reasons they buy a home are personal (they just got married, they are looking for a good place to raise children, they want to be near friends and family, they want to better enjoy their retirement, etc.). This will never change.
Looking at the new tax code, Mr. McBride’s opinion makes the most sense:
“There will be some negative impact based on SALT, but overall the impact of these policy changes on housing will be minimal.”
For more information, click here for a downloadable pamphlet.
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25572 N 113th Way Scottsdale, AZ 85255
$3,000,000
4
Beds
6
Baths
5,593
SqFt
Status
Active
MLS #
6726576
Property Type
Single Family Residence
Price Type
--
Spectacular luxury home located in coveted guard gated Troon Village, w/ dramatic drive-up appeal & picturesque Sonoran boulder setting, boasts panoramic mountain views. Architectural masterpiece w/ fine details & thoughtful home design, this great room split bedroom plan with exquisite indoor outdoor AZ living is an entertainer's dream.Luxurious kitchen with expansive eat-in island, Wolf gas range & electric ovens, SubZero fridge/freezer, opens to inviting family room with charming stone fireplace, slate floors, rich wood planked ceiling accented with stunning beams, opens to outdoor living with retractable glass & screen slider & dine in style with Four Peaks views & seated wet bar with access to downstairs tasting room and 500 bottle temp-controlled wine cellar. Executive office with custom built-ins, Owner's retreat with flex exercise/office opens to private patio and backyard outdoor living space and pool/spa. Ideal ensuite secondary bedrooms with private entries and expansive wrap around balcony with fireplace. Downstairs hub with an impressive in-home theatre with wet bar plus flex room that could serve as a bunk room/office/exercise room with half bath. Spacious 1200 SF air-conditioned extended three car garage is fit for a king with half bath, motorcycle lift ,work benches, air compressor lines and easy access elevator lift to main level. G5 automated system, owned solar panels, 5 new AC units, pool equipment and appliances. A sanctuary in the Sonoran desert.
5818 N 45th Street Phoenix, AZ 85018
Open House
$3,000,000
4
Beds
3.5
Baths
3,372
SqFt
Status
Active
MLS #
6768941
Property Type
Single Family Residence
Price Type
--
Stunning 4-bedroom + office, 3.5-bathroom home in the prestigious Camelback Canyon Estates neighborhood of Phoenix, AZ. This property epitomizes modern elegance and offers an unparalleled living experience with its prime location nestled between Camelback Mountain, Paradise Valley, and Arcadia. The home boasts extraordinary views of the iconic Camelback Mountain, visible from the spacious pavered front courtyard, kitchen window, and the backyard oasis. The open and light-filled living spaces are designed for both comfort and style, featuring a double-sided fireplace and a wet bar with clever wine storage. The kitchen is a chef's dream, adorned with sleek walnut cabinetry, a built-in buffet, Miele appliances, and Sub-Zero refrigerator/freezer. The butler's pantry provides additional storage, food prep, and office/craft space. The split floorplan ensures privacy, with a spacious primary suite that includes a sitting room/office and two closets. The luxurious primary bath is equipped with walnut cabinetry, double vanities, a custom walk-in shower featuring fossilized limestone tile surround, two shower heads/four body spray jets , and a jetted soaking tub. The crown jewel of this home is the spectacular backyard, designed by modern building design for ultimate outdoor living. Motorized pocketing glass doors open to a post-free patio cover, shading dining and living areas, complete with a movie projector and motorized screen. The outdoor kitchen is top-of-the-line, featuring a Turbo Stainless Steel BBQ, Turbo Teppanyaki grill, and a rare built-in wood-burning grill by Grillworks, Inc. The updated heated resort pool includes a spacious Baja ledge and a tiled vanishing edge spillover spa. Additional shaded lounging spaces, natural gas fireplace with seating, and outdoor shower complete this private resort feeling. This home is conveniently located near the best dining, resorts, shopping, and recreation the valley has to offer, including Global Ambassador, Steak 44, The Henry, AJ's Fine Foods, The Village Health Club, and Echo Canyon Trailhead on Camelback Mountain
29906 N Miradar Court Scottsdale, AZ 85262
Open House
$3,000,000
4
Beds
5
Baths
5,684
SqFt
Status
Active
MLS #
6651364
Property Type
Single Family Residence
Price Type
--
Spectacular luxury living in this meticulously designed Spanish Ranch home, nestled in Granite Mountain Ranch, North Scottsdale's only gated equestrian estates. Gorgeous Four Peaks mountain view estate is on almost 5 acres (2 lots) located at the end of a large cul-de-sac. Sale includes two parcels totaling 4.803 acres - parcels 219-40-083 and 219-40-082.The property's circular driveway and stone gate house create a grand entrance with a fountain and gas fireplace that welcomes guests with a sense of luxury and prestige. An architectural masterpiece, this four-bedroom custom home with attached casita was originally crafted for the architect himself, and exudes sophistication and attention to detail at every turn. The interior is captivating with elegance and warmth, and has four distinct shapes of large tumbled travertine, laid in a Versailles pattern throughout main living areas and extending gracefully to the outdoors. Pillars and niches adorned with ambient lighting create a timeless look. Main living area has amazing views to the outdoors with a massive cantera stone gas fireplace. The kitchen is a chef's delight, equipped with a warming drawer, appliance garage, a new ASKO dishwasher and a huge center island with granite slab countertops. The Wolf built-in cooktop and oven are propane gas and the range hood is accentuated with faux painting. The SubZero double refrigerator and two dishwashers ensure efficiency. The separate bar seats five and is granite-topped with ice maker and wine chiller. This residence is a showcase of thoughtful features, including a central vacuum system, four AC zones, an AV closet and a beautiful powder room. The den, complete with wood-beamed ceilings offers versatility with its closet, potentially transforming it into a bedroom. A four-car garage with epoxy floors and a spacious in-garage storage room. The utility closets house a water softener, 4 HVAC air handlers, and two hot water heaters. The primary suite on the same side as the den invites tranquility, with wood flooring, knotty alder cabinets and doors, and a gas fireplace. The primary bath is a spa-like retreat, featuring a coffee bar with built-in SubZero refrigerator, jetted soaking tub, separate closets with custom built-ins, and an indulgent six-shower head experience. Enjoy the breathtaking view of Four Peaks from the primary bathroom, complemented by a travertine outdoor shower. Your visitors will love the guest amenities, with two spacious guest suites on the opposite side of home with private baths and large walk-in closets. A 400 sq ft casita with a kitchenette, SubZero fridge, walk-in closet, and full bathroom provides your guests a private retreat. Technology seamlessly integrates with luxury in this property, with Control 4 system, managing 4 outdoor security cameras, music with in-ceiling speakers throughout the house and back patio, weather, and six mounted TVs which convey to the buyer. A formal dining room with a bricked ceiling and double doors opening to the front courtyard sets the stage for intimate gatherings around the gas fireplace and courtyard fountain. The outdoor space is an entertainer's dream. The backyard oasis offers unobstructed Four Peaks and Matzatzal mountain views, with a Jacuzzi and pool that can be controlled from inside the home. Owned solar system heats the pool for extended enjoyment in the fall and spring. A built-in grill and bar, wood-burning fireplace and firepit complete the entertainment amenities. Granite Mountain Ranch is the only gated equestrian community in Scottsdale where each homeowner can have up to 4 horses per lot. It has 100 home sites spread across 315 acres, 15 acres of equestrian facilities including 2 large arenas and 2 round pens, paved and lighted streets, underground utilities and a private water resource. It's adjacent to the McDowell Sonoran Preserve. You'll have easy access to unlimited riding trails, hiking, biking & fishing. Within a 10-to-30 minute drive are many of Arizona's top golf courses.
10670 E Hedgehog Place Scottsdale, AZ 85262
Open House
$3,000,000
5
Beds
6
Baths
4,665
SqFt
Status
Active
MLS #
6675444
Property Type
Single Family Residence
Price Type
--
Welcome to this enchanting Spanish-style home nestled amidst boulder outcroppings with breathtaking views of the McDowells, Pinnacle Peak and Crescent Moon. Located in the gated community of Pinnacle Canyon, this custom home was built by RS Homes with a focus on blending elegant architecture and natural beauty. Inside you will discover a warm and inviting interior adorned with classic accents including wood vegas & fireplace mantels, chocolate Saltillo & travertine tile, wood flooring and divided light windows. The inviting kitchen, with colorful tile countertops and backsplashes and convenient dumb waiter, adjoins a breakfast room with sunrise views. The primary suite, with cozy fireplace and private patio access, includes a bonus room perfect for nursery, exercise room, etc. Outside, the enchanting backyard oasis awaits with elevated covered patio and dining area, pool, spa, outdoor kitchen and pool bath. With extreme attention to detail, this is an opportunity to own a jewel box in the desert.
Prescott AZ 86305
$2,999,999
3
Beds
3
Baths
3,586
SqFt
Status
Active
MLS #
6609583
Property Type
Single Family Residence
Price Type
--
Less than 25 miles from downtown Prescott, AZ awaits a truly special equestrian treasure - Happy's Dream Ranch. Designed for the pleasure of humans and horses alike, this beautiful property set in Long Meadow Ranch features a warm yet elegant modern 3586 sqft. farmhouse with a 1-car attached, and 2-car detached garage. Beyond the home, the property includes a hay barn w/ bunkhouse, a tiny home, and two airy barns with tack rooms and a total of 20 stalls. Perimeter fenced and cross fenced, there is ample room to train, ride, and run on the magnificent 36.46 acre property - including in a 120' x 240' arena, and an electric Eurociser. With a backdrop of majestic Granite Mountain and stunning 360 degree sweeping views, Happy's Dream Ranch provides the quintessential Arizona ranch lifestyle!
2659 E Maplewood Street Gilbert, AZ 85297
$2,999,999
5
Beds
3.5
Baths
4,031
SqFt
Status
Active
MLS #
6717424
Property Type
Single Family Residence
Price Type
--
PERSONALIZE YOUR DREAM HOME & CHOOSE YOUR FINISHES! Gilbert's Landmark at Somerset, spanning 4,031 sq ft - nestled by the park on .54 acres with a 4-car garage & storage room. A large courtyard welcomes you, while inside, 5 bedrooms, including a luxurious primary suite & a full guest retreat & playroom, await. The heart is the open kitchen, great room, & nook area, perfect for gatherings. Retreat to the primary bedroom oasis with a spa-like ensuite, large walk-in closet & large walk-in shower with benches on both sides & a separate soaking. A large, covered patio & a N/S lot orientation. Don't miss out on this opportunity to own a custom-built masterpiece in Gilbert's Somerset. Skip the lengthy design & construction process! ESTIMATED COMPLETION QUARTER ONE 2025!
17412 E Bobwhite Way Rio Verde, AZ 85263
$2,999,999
3
Beds
3.5
Baths
4,227
SqFt
Status
Active
MLS #
6766185
Property Type
Single Family Residence
Price Type
--
Nestled within the well-sought-after guarded gate community of Trilogy at Verde River, this luxury residence epitomizes refined living with its prime location overlooking the 4th Green and breathtaking mountain vistas. Situated on an expansive 24,500+ sqft lot, no detail was spared in the design of this exquisite home. The grand entry foyer is a showstopper, featuring dramatic high ceilings and elegantly surrounded by sleek tile walls, creating a stunning first impression. As you enter the great room, you'll be captivated by the refined upgrades, including dropped beamed ceilings, floor-to-ceiling fireplace, and clean, neutral tones that enhance the spacious interior. Natural light floods the room through skylights and a center-open multi-panel sliding glass door, seamlessly connecting to the resort-style backyard. The gourmet kitchen features an island with designer pendant lighting, complemented by high-end stainless-steel appliances and stacked cabinetry. The strategically placed butler pantry bridges the kitchen and dining room and is complete with 2 wine refrigerators. The entertainment room is spacious and fitted with a sink, beverage refrigerator, built-in cabinetry, and a sliding door that opens up to the covered patio! The primary suite exudes luxury with built-in cabinets, custom shutters, and an ensuite bathroom featuring a soaking tub, dual-entry tiled shower, bidet toilet, and his-and-her custom walk-in closets by Classy Closets. The private casita has an entrance from the front courtyard and offers a living room, bedroom, and ensuite. This luxurious backyard is an entertainer's dream, featuring an oversized pool with mesmerizing fountains that change colors, creating a private water show against the backdrop of stunning mountain views. The elevated spa adds a touch of relaxation, while the custom pergola offers a high-top counter, a TV, and an EVO grill, BBQ, and cooktop. Whether hosting or unwinding, this space blends beauty and functionality for unforgettable outdoor living. This home offers a blend of elegance and comfort, perfect for those seeking the pinnacle of desert living in Trilogy at Verde River. The amenities at Trilogy at Verde River are World Class with Tom Lehman-inspired eighteen-hole golf course, tennis courts, pickleball courts, and bocce ball, heated lap pool and resort-style swimming pool, hot tub, Afterburn fitness center, Helen's demonstration Kitchen for cooking classes and a 7.5 acre dog park. The community center has casual poolside dining at Eddy's Diner and gourmet dining at award-winning Needle Rock Kitchen and Tap, Alvea Spa with full-service Salon and Spa amenities, Art Loft and events center. Trilogy at Verde River is adjacent to the Tonto National Forest and is situated in the middle of miles and miles of hiking and biking trails.
3500 E Lincoln Drive Unit 22 Phoenix, AZ 85018
$2,999,999
5
Beds
4.5
Baths
4,241
SqFt
Status
Active
MLS #
6729102
Property Type
Single Family Residence
Price Type
--
Welcome to your GUARD GATED serene retreat on over half an acre along the mountainside of Lincoln Hills with city views of the valley! Enter into the open concept floorplan with newer ACs, roof w/ 5 year warranty, water purification system, updated flooring, solid core doors, and updated ceiling fans and light fixtures throughout. Remodeled chef's kitchen with top of the line Sub-Zero fridge, 4 burner gas cooktop plus griddle, all new cabinets/ pull outs, RO system, prep sink, and wine fridge. Luxury primary suite with extended balcony overlooking the mountain and city views. Flex game room designed for indoor/outdoor style living with glass garage doors. Private backyard oasis with multiple private patios, pool, outdoor kitchen with gas BBQ, dishwasher, and fridge. Come take a look today
7702 N Moonlight Lane Paradise Valley, AZ 85253
$2,999,999
5
Beds
6.5
Baths
6,214
SqFt
Status
Active
MLS #
6745821
Property Type
Single Family Residence
Price Type
--
THE MOST STUNNING VIEWS IN PARADISE VALLEY! Seize the extraordinary and rare chance to own a prime 1.2-acre hillside lot offering sweeping, awe-inspiring views of Camelback Mountain, Mummy Mountain, the McDowell Mountains, Pinnacle Peak, and the shimmering city lights below. This hilltop sanctuary is nestled in the prestigious Tatum Canyon enclave in the heart of Paradise Valley. Privately gated and situated at the end of a tranquil cul-de-sac, the property currently features a livable soft contemporary-style home. Its prime location is just moments from the Paradise Valley Golf and Country Club, the new Ritz Carlton Resort, Camelback Inn & Spa, and a variety of upscale shopping and dining options. Remodel the existing 6,200 SqFt home or create the estate of your dreams— no HOA restrictions.
2402 E Esplanade Lane Unit 902 Phoenix, AZ 85016
$2,999,999
2
Beds
3
Baths
3,542
SqFt
Status
Active
MLS #
6738813
Property Type
Apartment
Price Type
--
Nestled in the heart of the prestigious Biltmore area of Phoenix, this luxurious ninth-floor condominium residence offers over 3,500 square feet of contemporary elegance. The expansive floor plan features impressive entertaining spaces with breathtaking views to the downtown Phoenix skyline and beyond. Floor to ceiling windows plus two oversized balconies highlight these vistas and provide ideal natural light. As expected, top-of-the-line finishes and modern design elements abound, from beautiful light real oak wood floors to Wolf, Subzero and Miele appliances. Twp private and separated en suite bedrooms plus a dedicated office/study and powder room complete this perfect home. Esplanade Place offers true luxury lock and leave living along with the highest standards for residence security, including on-site guard, controlled garage and floor access, on-site valet, full exercise gym and steam rooms, large club room for entertaining with catering kitchen, roof-top pool, gas grills for residents plus a dedicated dog run area. Condominium residences of this size and level of finish are difficult to find in the greater Phoenix/Scottsdale market. This offering is truly a gem!
30505 N Sage Drive Peoria, AZ 85383
$2,999,995
3
Beds
3.5
Baths
4,483
SqFt
Status
Active
MLS #
6777345
Property Type
Single Family Residence
Price Type
--
This stunning contemporary home situated in Blackstone Country Club boasts elegance and sophistication. All furnishings included! With exquisite modern finishes throughout, this brand new home offers breathtaking golf course and mountain views from the 12th Fairway. The 50-foot long heated PebbleTec pool is perfect for relaxation, exercise and entertaining. The kitchen is a chef's dream with glossy acrylic high-end cabinetry, gorgeous quartz countertops, and top-of-the-line Thermador and Sub-Zero appliances, 2 dishwashers and includes a hidden butler pantry with ample wine refrigerator. The attention to detail in this home is impeccable, featuring expansive windows that seamlessly integrate with the outdoor landscaping. Wait until you see this gem! Other notable features include a custom sculpture at the entryway, 14-foot ceilings, luxury automatic window treatments, a library with built-in bookcases, and a separate TV viewing room. Three large bedrooms all include baths and exits to the pool area. This home was built with no steps and includes air-conditioned garage space. Blackstone is a guard-gated community with a private Country Club which has an optional membership.
2150 E Belmont Avenue Phoenix, AZ 85020
$2,999,995
3
Beds
3.5
Baths
4,716
SqFt
Status
Active
MLS #
6643007
Property Type
Single Family Residence
Price Type
--
Biltmore Highlands, located on a hillside bordering the Phoenix Mountain Preserve Piestewa Peak. This residence combines nature's tranquility with urban convenience, offering breathtaking & unobstructed mountain, and city views! Minimalist-style kitchen with ample storage, and a complete butler pantry. The primary bedroom has a sizable walk-in closet w/built-ins and a lavish ensuite with dual sinks & soaking tub. The upstairs laundry room is complete with sink & cabinetry. Discover the entertainer's backyard, where an elevated negative edge pool awaits for refreshing swims, or chill and take in the mountain views. The rooftop party deck is an excellent spot to savor those amazing sunsets complete with an outdoor kitchen. You have a private gate to access the Phoenix Mountain Preserve! The scrim that covers the front and east side of the home creates a solar passage, increasing efficiency, privacy, and once it rust it will allow the home to blend with its desert surroundings. A huge covered patio in front of the home allows you to enjoy indoor-outdoor living when opening your matching 4-panel pocket doors and 8 pivot doors, doubling your space for entertaining. World-class hiking right out your back gate! Just Minutes from Old Town Scottsdale, Sky Harbor Airport, and downtown Phoenix. Located near the 51 freeway, without the noise, that gets you to the 10 or the 101 freeways in minutes.