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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5501 E Cholla Street Scottsdale, AZ 85254
$2,389,900
5
Beds
3.5
Baths
4,192
SqFt
Status
Active
MLS #
6759858
Property Type
Single Family Residence
Price Type
--
Introducing a stunning new luxury listing in the heart of Scottsdale, Arizona - a contemporary masterpiece remodeled in 2022 and designed for the discerning homeowner who values elegance, comfort, and entertainment. This exquisite 5 bedroom, 3.5 bathroom residence spans almost 4,200 square feet of living space, offering an ideal blend of modern luxury and desert beauty. The home is situated on an expansive lot with room to relax, play and entertain. The open-concept design has a seamless flow between the gourmet kitchen, dining area, and living room. The chef's kitchen features state-of-the-art appliances, custom cabinetry, a large island with quartz countertops, and a walk-in butler's pantry - perfect for preparing meals while still engaging with guests. Adjacent to the kitchen, the spacious living area boasts a sleek, modern fireplace and four panel sliding glass doors that lead out to the resort-style backyard. The outdoor space is where this home truly shines as an entertainer's delight. A sparkling heated pool with a waterslide anchors the backyard, while an extended length covered patio provides the ideal setting for lounging and hosting gatherings. Enjoy cooking in the fully equipped outdoor kitchen with a new BBQ grill, ample counter space, fireplace and shaded area or relax and unwind in the above ground spa. The primary suite offers a luxurious retreat, complete with a spa-like bathroom featuring a soaking tub, dual vanities, and a walk-in shower. The suite also includes two expansive walk-in closets and direct access to the backyard. Each of the additional four bedrooms is generously sized and this floor plan ensures comfort and privacy for family members and guests alike. This Scottsdale gem combines luxurious living with a prime location, offering easy access to world-class golf courses, upscale shopping, fine dining, and the vibrant cultural scene of Old Town Scottsdale and Kierland. Welcome home!
9525 Sierra Springs Drive Pinetop, AZ 85935
$2,375,000
4
Beds
4.5
Baths
4,330
SqFt
Status
Active
MLS #
6739699
Property Type
Single Family Residence
Price Type
--
Stunning Rustic Meets Modern with this gorgeous Luxury Home in a wilderness setting making it the most perfect Upscale Cabin home one can imagine in the beautiful lakeside Sierra Springs Community of Pinetop. This exclusive community boasts the best of the best in Cabin living in the white mountains and this rare opportunity to own a brand-new home built by an established and experienced hometown builder.Only 12 months build time, and you too can own in this prestigious community on one of the nicest view lots still available.They are TOP NOTCH. Minutes to town but far enough to enjoy the starlit dark skies and wildlife.
4042 N Pinnacle Hills Circle Mesa, AZ 85207
$2,375,000
5
Beds
4.5
Baths
6,554
SqFt
Status
Active
MLS #
6774139
Property Type
Single Family Residence
Price Type
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Embrace enduring elegance with a Spanish/Mediterranean influence in this custom masterpiece, nestled in the lush Sonoran Desert of Las Sendas. Harmonizing the comforts of modern living with timeless details, the home features inlaid wood and natural stone floors, Cantera stone fireplace surrounds, and rich natural wood doors, trim and casement windows. Attention to detail is evident in the turned columns and various ceiling treatments, including coffered ceilings, stone-clad groin vaults, barrel domes, and a stunning brick-lined surface-mounted dome over the breakfast nook. Indoor/outdoor living is made seamless with French slider doors in the main living areas, leading out to an expansive under-roof patio with tumbled pavers and elegant wrought iron fencing. A true sanctuary, the back yard features views of Red Mountain and surrounding mountains, a gorgeous fenced diving pool and spa, a gas firepit with seat wall, easy-care artificial turf and a built-in trampoline. The expansive view decks feature over 2,400 SF of entertaining space, offering 360-degree views of city lights, stunning sunsets and mountain views. A locked 'gate' at the rear of the property provides easy access to the extensive hiking and mountain biking trails that run throughout Las Sendas and connect to the Hawes Trail system. Inside, visitors will discover a 'perfect' floor plan featuring 6,030 square feet on the main level and a 524-square-foot upper loft, ideal for an additional game room or play space. Formal living and dining areas greet guests at the impressive entry, while the gourmet kitchen and great room serve as a comfortable retreat at the 'heart' of the home. The kitchen boasts custom Alder cabinetry, bar seating, and a center island with a prep sink, two dishwashers, a 6-burner Wolf range with a built-in griddle, dual ovens, a twin 36 Sub-Zero refrigerator/freezer combo, a warming drawer, built-in desk, and large walk-in pantry. The great room is spacious and warm, with a floor-to-ceiling Cantera stone fireplace, hand-scraped wood floors, built-in speakers and easy access integrated wiring for easy A/V hookup. The owner's suite features a gorgeous fireplace with Cantera surround, sitting area, sublime marble vanities and prep area, a jetted tub, oversized shower, bidet, and a spacious closet with built-ins. Additional rooms include a spacious den with storage closet and coffered ceiling, one bedroom near the owner's suite (perfect for a nursery, gym, or second office), and three guest rooms at the opposite end of the home, all with walk-in closets- two of which have ensuite baths, along with an additional full bath. A separate home theater offers a projector and screen, built-in speakers with direct access to the upstairs loft/game room. The impressive 4-car garage provides over 1,240 square feet of open space, featuring newly coated epoxy floors and two over-height/width double garage doors (one 10', one 8'). room for additional amp service, and a circular drive accented by easy-care turf is great for guests. Las Sendas is an award-winning community with miles of hiking and biking paths, a top-rated golf course, tennis and pickleball courts, heated lap pools, and a gorgeous clubhouse. Convenient to the 202 Red Mountain Freeway, the community backs to the Tonto National Forest, and is just minutes from pristine hiking and mountain biking trails, paddling and kayaking, nearby lakes and just one hour from the cool pines of Payson!
3514 N Apache Way Scottsdale, AZ 85251
$2,375,000
5
Beds
5
Baths
3,527
SqFt
Status
Active
MLS #
6782475
Property Type
Single Family Residence
Price Type
--
FULLY FURNISHED AND TURN KEY READY LUXURY RETREAT LOCATED DOWN THE STREET FROM THE VALLEY HO HOTEL AND WALKING DISTANCE TO OLD TOWN SCOTTSDALE. BUILT IN 2022, FEATURING 5-BEDROOMS, 5-BATHROOMS FAMILY ROOM WITH A LARGE GLASS SLIDER, A COZY FIREPLACE, A SPACIOUS LOFT, A TEMPERATURE CONTROLLED 3 CAR GARAGE WITH EPOXY FLOORING, LIGHT-COLORED AIRY WOOD FLOORS, AND HIGHER-END LUXURY TILE PACKAGES, STUNNING MAIN ENTRY, GOURMET KITCHEN, SPACIOUS KITCHEN, OVERSIZED QUARTZ KITCHEN ISLAND, EAT-AT BAR, TOP TIER APPLIANCES, 5 INCH BASEBOARDS, CONTRASTING COLOR AND POLISHED SHAKER CABINETS, ABUNDANT RECESSED LIGHTING, RESORT-STYLE SPA BATHROOMS WITH WALK-IN SHOWERS, ACCENT WALLS, SOAKING TUBS, ZERO ENTRY SHOWERS, LARGE LAUNDRY ROOM WITH GEOMATIC TILES, SPARKLING POOL, BARBECUE. PERFECT FOR YOUR PRIVATE OASIS, SECONDARY HOME OR INVESTMENT PROPERTY.
6545 N 29th Street Phoenix, AZ 85016
$2,375,000
4
Beds
3.5
Baths
3,820
SqFt
Status
Active
MLS #
6728828
Property Type
Single Family Residence
Price Type
--
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4511 N 38th Place Phoenix, AZ 85018
Open House
$2,375,000
6
Beds
4.5
Baths
3,545
SqFt
Status
Active
MLS #
6707667
Property Type
Single Family Residence
Price Type
--
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41504 N 107th Way Scottsdale, AZ 85262
$2,367,000
3
Beds
3.5
Baths
2,941
SqFt
Status
Active
MLS #
6745885
Property Type
Single Family Residence
Price Type
--
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240 Casitas Court Sedona, AZ 86351
$2,350,000
4
Beds
5
Baths
3,624
SqFt
Status
Active
MLS #
6777299
Property Type
Single Family Residence
Price Type
--
Contemporary Luxury with Spectacular Views! This stunning, to-be-built modern home offers breathtaking, panoramic views of Bell Rock, Castle Rock, Lee Mountain, and Courthouse Butte. With no HOA restrictions and short-term rentals allowed, this property is the perfect blend of elegance and investment potential. The design features a floor-to-ceiling window wall that opens up, seamlessly blending indoor and outdoor living spaces. Highlights include: 3,624 sq ft of sleek, contemporary design with 4 bedrooms and 4.5 bathrooms Energy-efficient construction with 2x8 walls, 2'' exterior foam insulation, a metal roof, and owned solar panels Multiple outdoor spaces: 3 view decks and a covered patio, including an outdoor kitchen with a built-in BBQ Spacious Great Room with a gas fireplace, open kitchen, and dining area Luxurious main-level Master Suite with stunning views and a split guest bedroom with a private bath Lower level includes 2 guest suites, a living room, and a 3-car garage Elevator shaft for future accessibility and 220 electric in the garage, ready for electric vehicles Prime location, just minutes from hiking trails, local markets, dining, and three golf courses. Conceptual images are provided, with materials and renderings subject to change. Features include stacked stone exterior, concrete flooring on the lower level, cork floors on the main level, and plush carpet in the bedrooms. This home is designed for the ultimate Sedona lifestyle with its sleek contemporary design and unbeatable views.
4633 N 49th Place Phoenix, AZ 85018
$2,350,000
5
Beds
4
Baths
2,827
SqFt
Status
Active
MLS #
6763909
Property Type
Single Family Residence
Price Type
--
Beautiful property on a 0.7 acre lot with breathtaking Camelback views ! Boasting an incredible backyard it's an entertainer's dream. Imagine relaxing by the sparkling pool, enjoying the sunset or hosting gatherings in your expansive outdoor space. The home was renovated and furnished with high end material in 2020. The gourmet kitchen and elegant finishes are remarkable. There are a lot of natural lights pouring through the large windows, enhancing the open-concept floorplan. 3 primary bedrooms with ensuite to provide comfort and luxury. Everything is included you simply need to bring your suitcase. This property has been an incredible rental producer, this could be your investment gold mine! Located just minutes from Scottsdale's Fashion Square, a variety of world-class restaurants. and premier golf courses, this home offers easy access to the best of both Arcadia and Scottsdale living. Whether you're looking for a serene retreat or a place to entertain, this property is an absolute gem. Don't miss out on the opportunity to live in one of Phoenix's most desirable neighborhoods with views that will leave you in awe!
3749 E Juniper Circle Mesa, AZ 85205
$2,350,000
5
Beds
5.5
Baths
4,374
SqFt
Status
Active
MLS #
6754049
Property Type
Single Family Residence
Price Type
--
This home is a collector's paradise, boasting unparalleled elegance and move-in readiness. With recent upgrades enhancing every corner, it offers the pinnacle of luxury living. The open floor plan features bedrooms each with their own ensuite, complemented by walk-out patios and a private backyard oasis that promises a resort-like experience. The home shines with fresh interior paint and a state-of-the-art misting system, alongside top-tier amenities like the Ferrari of Toto Toilets, a new AC unit, and water heaters. A whole-house water filtration and soft water system, therapeutic hot tub, and indoor/outdoor Minka Fans further elevate the living experience. For car enthusiasts, the property includes a true 6-car garage with Swiss Trax flooring and air conditioning for extra comfort. The chef's kitchen is a dream, equipped with Subzero/Wolf appliances and an extension of the outdoor kitchen ideal for entertaining. Every detail in this home has been meticulously attended to, making it a one-of-a-kind property on the market. Don't miss out on the opportunity to explore all the exceptional features when you view this home & receive a complete list of enhancements!
7946 E Soaring Eagle Way Scottsdale, AZ 85266
$2,350,000
4
Beds
5
Baths
4,273
SqFt
Status
Active
MLS #
6779316
Property Type
Single Family Residence
Price Type
--
Incredible custom home in Montesano at Winfield Resort. Owners have updated, upgraded, and maintained this home like few others. Mechanicals (AC's), roof, pool and 4 car garages all updated to the max. Resort pool backyard w/ built-in fireplace, bar-b-que island, htd pool/spa, covered and uncovered patios with captivating views to Winfield Mtn(75 acre boulder studded preserve). Large custom lot tucked away in tranquil cul-de-sac. Featuring three ensuite bedrooms and a full flex office/den/hobby or full 4th bedroom w/ walk in closet and 3/4 bath and private separate exit. The garages are split 2 and 2 with one side temp controlled, extended bays, workshop areas, storage room, epoxy floors, IMMACULATE. High volume ceilings, expansive kitchen/great room/ dining, master.Full resort amenities!
19735 E Sonoqui Boulevard Queen Creek, AZ 85142
$2,350,000
5
Beds
4
Baths
5,089
SqFt
Status
Active
MLS #
6781997
Property Type
Single Family Residence
Price Type
--
ABSOLUTELY BEAUTIFUL 5 BEDROOM + DEN, 4 BATHROOM WITH 4 CAR GARAGE ON A HUGE 35,000+ SQUARE FOOT LOT IN CIRCLE G THAT HAS JUST UNDERGONE AN EXTENSIVE REMODEL (SEE PICS...ITS GORGEOUS!). HIGH CEILINGS, SEPARATE LIVING AND GREAT ROOMS, HUGE ISLAND KITCHEN WITH HIGH END APPLIANCES, QUARTZ COUNTERS, WOOD FLOORING THROUGHOUT, THE MASTER SUITE IS LARGE AND ELEGANT, SEPARATE SOAKING TUB AND HUGE SHOWER, THE BASEMENT FEATURES 2 BEDROOMS, A FULL KITCHEN AND STACKABLE WASHER DRYER AND THEATER ROOM/FAMILY ROOM. THE EXTERIOR BOASTS AN OVERSIZED 4 CAR GARAGE, TONS OF STORAGE INCLUDING A SEPARATE AIR CONDITIONED STORAGE AREA WITH ACCESS TO THE GARAGE AND BACKYARD (PERFECT FOR A CONDITIONED WORKSHOP), HUGE BACK PATIO, WITH OUTSIDE FIREPLACE, SPORT COURT, BEAUTIFUL PRIVATE POOL W GROTTO, NEW ROOF, ETC.