The recent tax bill that was passed near the end of last year will have a major impact on homeowners and renters alike, and might determine whether you decide to rent or buy going forward. That’s why apartments for rent in California are going fast! Now keep in mind, even tax experts and specialists are having a hard time making sense out of everything that’s in this 500-page bill. But for homeowners, what it boils down to is that this law will reduce the amount they can deduct from their taxes. For many, this will make it more advantageous to rent than to buy. Here are two specific takeaways:
- The bill reduces mortgage interest deductions. The amount of mortgage interest homeowners could deduct from their federal taxes was previously capped at $1 million, but that amount has been reduced to $750,000. This is still a lot of money, but for a lot of areas in California or in booming tech towns like Reno where housing prices are skyrocketing, many would-be homeowners could be affected.
- It limits property tax deductions. Under new legislation, homeowners cannot deduct the full amount of state and local property tax from their federal income tax. The amount is now capped at $10,000. This has the potential to impact a lot of homeowners, particularly those in high-tax states like California.
By decreasing the amount of deductions homeowners can take, the new tax bill takes away some of the financial incentives to buying a house. In many areas, such as Southern California, Sacramento, and Reno, where Lewis Apartment Communities are located, there is even more of a financial incentive to rent.
But even without this tax bill, people who live in our apartment communities and enjoy such amenities as a yoga studio, pool house, multi-car garage, dog spa and more will ask: Why would you ever want to buy?