Whatever happens with the upcoming tax cuts may have a short-term impact on our real estate market, but it won’t be the end of the world. Here’s why.
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How will President Trump’s new tax cuts affect our real estate market and you as a homebuyer or seller?
Before I give my thoughts on that question, I want to thank you for coming out to our recent Thanksgiving pie giveaway. We had a great turnout and had a lot of fun giving away so many pies. As you know, we also held a gift card raffle at the giveaway, so today I’ll announce the winners of our grand prizes.
Now, onto the news at hand. Nobody knows exactly what’s going to happen with these tax cuts, but there’s plenty of concern that the mortgage interest deduction is going away.
If you’re buying real estate just for the mortgage interest deduction, you’re buying real estate for the wrong reason. People buy real estate for many reasons, and the deduction was a great benefit, but it’s not the end of the word if it goes away. People will still buy real estate.
Many years ago, I was in a situation where I was fortunate enough to be able to pay off my home, and my financial planner told me not to pay off the home for the mortgage interest deduction because then I’d lose that deduction. I just went back and ran some quick numbers regarding what I saved with the deduction and having no mortgage, and I calculated that my savings were vastly greater by paying off the house instead of taking the mortgage interest deduction.
I liken this situation to when the state of New York banned smoking in bars. Back then, it was common to wonder if a lot of bars and restaurants would go out of business. 10 years later, the bar and restaurant industry is thriving. Everyone survived.
Change is sometimes hard, but change is generally good and positive. Whatever happens with the mortgage interest deduction may have a short-term impact on the market, but we’ll survive.