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What the tax bill means for buyers, homeowners

There’s good news and there’s bad news

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tax bill, gay news, Washington Blade, property taxes

There’s good news and there’s bad news in the new tax bill.

In case you missed it, the hotly debated new tax bill has officially passed. Since real estate is one of the key areas of change in the bill, everyone is asking us, “What does the new tax bill mean for me? Is this good news or bad news for D.C.-area buyers and sellers?” The answer, as it so often is in real estate is, “it depends!”

The initial version of this new tax bill would have been troublesome for real estate values in our area. It slashed the mortgage deduction in half, had big changes for capital gains, and made it much more expensive to move. Several changes were made between the initial draft and the final form, which makes the final impact of the bill more of a mixed bag. There’s good news and there’s bad news.

So without further ado, here are the main changes and takeaways affecting homeowners in our area.

MORTGAGE INTEREST DEDUCTION

THE CHANGE: Through the end of 2025, new homebuyers will only be able to deduct interest on the first $750,000 of a mortgage (down from $1 million). In 2026, the deduction cap will revert to $1 million in loan value. Existing mortgages will be unaffected.

THE IMPACT: None for existing homeowners or new buyers with loan amounts under $750,000. While this reduction is bad news for upper price point buyers, the news is much better than the original proposal, which was a reduction to $500,000 and would have affected the majority of mortgages in our area. Remember, these are loan amounts – NOT sales prices. Thus, the only impact will be for buyers with loans above $750,000 – which most often is homes above $825,000 – depending on how much the buyer is financing. While it is possible the bill could cause a small slowdown for “move-up” buyers in our market, we don’t anticipate this causing a major change now. The impact of the new cap will probably make it less attractive to refinance in upper brackets. If your loan existed before December 14, 2017 up to $1,00,000 can still deduct the interest as long as the new loan does not exceed the amount refinanced.

Let’s look at Buyers A & B to see how this new cap comes into play.

Buyer A is putting 10% down on a sales price of $825,000, meaning he has a loan of $750,000, which is the deduction limit. Buyer A would be unaffected.

Buyer B is putting 10% down on $1,000,000, which is a loan amount of $900,000. The deduction can still be taken, but can only be taken on the first $750,000. Buyer B would not be able to deduct the interest paid on $150,000 of the loan (the difference between $750K-$900K).

HOME EQUITY LOAN INTEREST DEDUCTION

THE CHANGE: The new tax bill also suspends the deduction for interest on home equity loans until 2026. Currently, deductions are allowed for loans up to $100,000. Caveat: the interest on a home-equity loan can be deducted if the proceeds are used to substantially improve the home.

THE IMPACT: This change makes it less attractive for homeowners to take out equity lines on their homes in order to do minor renovations or use their home’s equity to pay for other things like kids’ college tuition or other big purchases. While this change is certainly frustrating for those planning to take advantage of these loans, it shouldn’t affect the housing market in a significant way since it is typically utilized by homeowners who have been in their properties for several years (and have equity) and are planning to stay longer to regain the equity over time.

MORTGAGE INTEREST ON A SECOND HOME DEDUCTION

THE CHANGE: The interest deduction on loans for a second home will still be allowed. However, homeowners can only deduct the first $750,000 of interest on the combined value of loans on their first and second homes.

THE IMPACT: Owners of multiple properties will feel this one. The bad news is there is likely to be a large impact on housing markets in resort or second home areas, as it will certainly be more expensive to own more than one property. While we are not a second home market, we have many clients buying properties in our area to be near their kids and grandkids. Similarly, we have many service members who take advantage of their housing allowance and low down payment opportunities with VA loans to keep their homes in other areas while buying a home when they are stationed here in the DC area. The impact of this change remains to be seen.

“SALT” DEDUCTION FOR STATE & LOCAL PROPERTY TAX

THE CHANGE: Individuals can only deduct up to $10,000 in state and local income and property taxes or state and local property and sales taxes. Previously, there was no cap on this deduction.

THE IMPACT: Homeowners living in high property tax states (like New Jersey with an average rate of 2.38%) will likely see an increased tax bill come April. Nationally, ATTOM Data Solutions estimates that 4.1 million Americans pay more than $10,000 in property taxes so it will affect many Americans. Locally, average property tax rates are more reasonable (Maryland is 1.1% which is #22 nationally, Virginia is .78% which ranks #37 nationally and D.C. is .57% bringing up the rear at #46 nationally), so it should have less of an impact here than it does in some of the higher-taxed states.

DEDUCTIONS FOR WORK-RELATED MOVING EXPENSES

THE CHANGE: Reasonable moving expenses for work-related relocations are no longer deductible – with the exception of those in the military.

THE IMPACT: While it is possible that fewer people will want to move due to this deduction, generally these types of moves come with increased salaries and opportunity, so we don’t anticipate big changes to the market because of this change.

CAPITAL GAINS

NO CHANGE. Despite some back and forth, the deduction for up to $500,000 in capital gains (or $250,000 for single filers) from selling a primary home remains (so as long as it has been the primary residence for two of the last five years). This is a big win, as previous versions of the bill sought to make the tenure requirements five of the last eight years as the primary residence.

SO, WHAT DOES THE NEW TAX BILL MEAN FOR HOMEOWNERS & HOUSE HUNTERS?

The good news is that many of the real estate changes in the new tax bill will have much less of an impact than previous versions of the bill suggested. On the plus side, it’s possible that the impact of the lowered deduction could be offset by lower income taxes for these high-end homebuyers, specifically business owners or those in “pass-through” businesses, which will see a big tax deduction on their income.

The bad news is we might see an impact in our “move up” market. We will carefully watch buyers’ reactions to the home mortgage deduction limit to $750,000, which could make “moving up” slightly more difficult in upper bracket price points. This change is likely to have the biggest impact in our market. Nationally, we may see a decrease in people buying vacation properties so resort areas will likely take a hit. We’ve read statistics that predict the changes could lower home values by 4%.

The bottom line? While there might be some slow down and a temporary dip in values while everyone comes to terms with the changes in the new tax bill, we don’t anticipate a significant long-term effect at this point. This is certainly a change from our perspective just a few short weeks ago when the bill was still in draft form.

We have been following this bill closely and know how impactful these changes are to your life. We’re here to help you through this complex process. If you are thinking of buying or selling and wondering what these changes might mean for you and your bottom line, please reach out. We are always happy to help.

 

Allison Goodhart DuShuttle is lead agent for The Goodhart Group, Alexandria’s and McEnearney Associates’ top-producing real estate team. In 2015, she was nationally recognized by Realtor Magazine, being named to its “30 Under 30” club. Allison can be reached at 703-362-3221 or [email protected]

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Real Estate

The rise of virtual home tours

Adapting to changing consumer preferences in spring real estate

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Looking for a home? Virtual tours hold special benefits for queer buyers.

In today’s dynamic real estate market, the spring season brings not only blooming flowers but also a surge of activity as buyers and sellers alike prepare to make their moves. However, in recent years, there’s been a notable shift in how consumers prefer to explore potential homes: the rise of virtual tours. 

For the LGBTQ community, these virtual experiences offer more than just convenience; they provide accessibility, safety, and inclusivity in the home buying process. 

Gone are the days of spending weekends driving from one open house to another – unless that’s your thing of course, only to find that the property doesn’t quite match expectations. With virtual tours, you can explore every corner of a home from the comfort of your own space – find something interesting? Schedule a showing with any LGBTQ Realtor at GayRealEstate.com.

This is particularly significant for LGBTQ individuals, who may face unique challenges or concerns when attending in-person showings. Whether it’s the ability to discreetly view properties without fear of discrimination or the convenience of touring homes located in LGBTQ-friendly neighborhoods across the country, virtual tours offer a sense of empowerment and control in the home buying process.

Moreover, virtual tours cater to the diverse needs of the LGBTQ community. For couples or families with busy schedules or those living in different cities or states, these digital walkthroughs provide a convenient way to view properties together without the need for extensive travel. Additionally, for individuals who may be exploring their gender identity or transitioning, virtual tours offer a low-pressure environment to explore potential living spaces without the added stress of in-person interactions.

At GayRealEstate.com, we understand the importance of adapting to changing consumer preferences and leveraging technology to better serve our community. That’s why our agents offer an extensive selection of virtual tours for LGBTQ individuals and allies alike – visit our website, choose an agent and within minutes you’ll have access to the Multiple Listing Service (MLS) via their website.

From cozy condominiums in bustling urban centers to sprawling estates in picturesque suburbs, virtual tours showcase a wide range of properties tailored to diverse tastes and lifestyles.

In addition to virtual tours, GayRealEstate.com provides comprehensive resources and support to guide LGBTQ buyers and sellers through every step of the real estate journey. Our network of LGBTQ-friendly agents is committed to providing personalized service, advocacy, and representation to ensure that all individuals feel respected, valued, and empowered throughout the process. Plus, we are happy to provide a free relocation kit to any city in the USA or Canada if you are a home buyer.

As we embrace the spring season and all the opportunities it brings in the real estate market, let’s also celebrate the power of virtual tours to revolutionize the way we find and experience our future homes. Whether you’re searching for your first apartment, forever home, or investment property, GayRealEstate.com is here to help you navigate the exciting world of real estate with confidence, pride, and inclusivity.

Jeff Hammerberg is founding CEO of Hammerberg & Associates, Inc. Reach him at [email protected].

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Real Estate

Boosting your rental property’s curb appeal

Affordable upgrades to attract and keep tenants happy

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Spruce up your curb appeal with new plants and trees.

In the District of Columbia, the rental market tends to open up significantly during the springtime for several reasons. First, spring brings about a sense of renewal and change, prompting many individuals and families to seek new living arrangements or embark on relocations. Additionally, the warmer weather and longer daylight hours make it more conducive for people to explore housing options, attend viewings, and make decisions about moving. Furthermore, spring often coincides with the end of academic terms, leading to an influx of students and young professionals entering the rental market. 

Landlords and property managers also tend to schedule lease renewals or list new vacancies during this time, capitalizing on the increased demand and ensuring a steady turnover of tenants. In the competitive world of rental properties, attracting and retaining quality tenants can be challenging. However, with some strategic upgrades, property owners can significantly enhance their units’ appeal without breaking the bank. From enhancing curb appeal to interior upgrades, here are some practical and cost-effective ideas to make your rental property stand out in the market.

Curb appeal

First impressions matter, and curb appeal plays a crucial role in attracting potential tenants. Simple enhancements like freshening up the exterior paint, adding potted plants or flowers, and ensuring a well-maintained lawn can instantly elevate the property’s appearance. Installing outdoor lighting not only adds charm but also enhances safety and security.

Interior upgrades

Upgrade the kitchen and bathroom fixtures to modern, energy-efficient options. Consider replacing outdated appliances with newer models, which not only appeal to tenants but also contribute to energy savings. Fresh paint and updated flooring can transform the look of a space without a hefty investment. Additionally, replacing worn-out carpets with hardwood or laminate flooring can make the unit more attractive and easier to maintain.

Enhance storage

Maximize storage options by installing built-in shelves, cabinets, or closet organizers. Tenants appreciate ample storage space to keep their belongings organized, contributing to a clutter-free living environment.

Improve lighting

Brighten up the interiors by adding more lighting fixtures or replacing old bulbs with energy-efficient LED lights. Well-lit spaces appear more inviting and spacious, enhancing the overall ambiance of the rental unit.

Upgrade window treatments

Replace outdated curtains or blinds with modern window treatments that allow natural light to filter in while offering privacy. Opt for neutral colors and versatile styles that appeal to a wide range of tastes.

Focus on security

Invest in security features such as deadbolts, window locks, and a reliable alarm system to ensure the safety of your tenants. Feeling secure in their home is a top priority for renters, and these upgrades can provide meaningful, genuine peace of mind.

Enhance outdoor spaces

If your rental property includes outdoor areas like a patio or balcony, consider sprucing them up with comfortable seating, outdoor rugs, and potted plants. Creating inviting outdoor spaces expands the living area and adds value to the rental property.

As landlords, investing in the enhancement of your rental properties is not merely about improving aesthetics; it’s about investing in the satisfaction and well-being of your tenants, and ultimately, in the success of your investment. By implementing these practical and affordable upgrades, you’re not only increasing the desirability of your units but also demonstrating your commitment to providing a high-quality living experience. 

These efforts translate into higher tenant retention rates, reduced vacancy periods, and ultimately, a healthier bottom line. Moreover, by prioritizing the comfort, safety, and happiness of your tenants, you’re fostering a sense of community and trust that can lead to long-term relationships and positive referrals. So, let’s embark on this journey of transformation together, turning rental properties into cherished homes and landlords into valued partners in creating exceptional living spaces.

Scott Bloom is owner and Senior Property Manager of Columbia Property Management. For more information and resources, visit ColumbiaPM.com.

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Real Estate

Real estate agents work hard for that commission

Despite recent headlines, buyers and sellers benefit from our expertise

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Realtors work hard for that rare six percent commission.

With there being a lot of noise in the media lately as I am sure you have read and heard headlines like “Gone are the days of the 6% commission” and “End of the good days of Realtors,” etc., I wanted to re-run a very short article of the long laundry list of things that well versed real estate agents bring to the table to earn that seldom 6% commission. It’s typically split in half and it has always been negotiable).

As a real estate professional you will go on listing appointments and buyer meetings to not only attempt to gain business but in doing so you also educate the general public on what it is that we as real estate professionals do. I know what you’re thinking – and if you’ve seen my photo before you wouldn’t be wrong to assume that I am cast in “Selling DC” as the lead villain. I am just waiting for that phone call! But in all seriousness, when I sit down to come up with a list of things to prove to prospective clients the value in working with me as their real estate professional, I am pretty blown away at the items and qualities that a trusted professional representing you in a real estate transaction is responsible for managing a myriad of tasks, including but not limiting to the following:

• Have a pulse on the marketplace to truly understand exactly what is happening from a buying and selling standpoint while also understanding the economic side of things – not just looking at interest rates. Why are rates where they are? What employers are laying off and could cause an influx of inventory? What are the trends for individuals moving IN or OUT of an area looking like? Forecasting the marketplace of all things that truly affect real estate is vital.

• Soft Skills – these are the skills often considered as customer service skills. The ability to be approachable by all types of people and ensure that you are open to receive information. Also – when telling you bad news – it’s important to ensure that it is done in a manner in which you, the receiver, will be pleasantly receptive.

• Pre-market vendors – not only are real estate professionals expected to market your home for sale or locate a home for you to purchase, we are also expected to have a list of pre-market vendors to which you can use for your lending needs, home inspection, title work, any fluffing and buffing needed pre market for the sale of your home such as a contractor, painter, landscaper etc. We have a book of extremely well vetted vendors that either I personally have used or past clients have used that can assist with your needs. This beats Googling for hours and accidentally choosing the wrong contractor. Section A of the pre-market vendor list includes those in which we real estate professionals use for marketing materials for your property – we will use the best photographers, have floor plans drawn for your property, video, staging, catering for brokers opens and the list goes on. Again – this is a well vetted list that we have worked on for years and done all of the heavy lifting and had those uncomfortable conversations when things are not properly executed – so you don’t have to.

• On Market Tasks – these are the tasks that most clients are unaware that we do. Oftentimes when a listing is on market – folks think that I am just cruising around in my convertible buying nice things. However I am in fact going around checking each listing on market to ensure that they are clean, the booties are replaced, marketing materials are stocked, light bulbs are all working, staging looks crisp and the list truly goes on. That of course, doesn’t include the tasks we do to properly market the property such as weekly email blasts, reaching out several times to follow up with showing agents to get their feedback, check the market to see what our competition looks like, what’s under contract and why, and again…..I could go on. Needless to say the most important and time consuming tasks are those that are done when the property is on market.

• “Contract to close” management – the term contract to close is pretty much what it sounds like – it’s what happens from the time we go under contract until we reach the closing finish line and you have those keys. Once a trusted real estate professional has fiercely negotiated on your behalf as a buyer, the fun starts. Again pops up this vendor list – helping guide you though selection of a home inspector, termite inspector, etc. for the inspections. A title attorney is needed (depending on your jurisdiction) and any other vendors for quotes like renovations, etc., that you might want done to the property. Once the inspection is completed and we go through possible re-negotiations then we must ensure that the lender has the documents needed from you completed in order to have the appraisal done to prove the value of the home you are under contract for. Now we are getting into the weeds – but once we are on the other side of things and the appraisal comes back at value and the loan is clear to close then we are at the finish line to your new home.

A similar story can be told if you are selling your home. The appraisal is a very important part of the checklist as that is the value in which your home is worth. The appraiser is a third party that neither the buyer, seller, lender or myself have any allegiance to. I do, however, have the duty to educate said appraiser on why I chose the listing price and how I came up with that value. 

• Post-market vendors. As mentioned before, a real estate professional should have a book of well vetted vendors from which to choose. Looking at the list of vendors now that we are on the other side of the table – I can provide a cleaning person, HVAC contractor, someone to repair the sprinkler system, a dog walker, the best caterers and bakery in town. Further down the road I am able to provide a wonderful wealth manager who can tell you what to do with that piece of real estate you purchased some time ago and we could go on for days.

While you are fully entitled to not use a real estate agent during your real estate transaction, I do believe that it is well within the realm of possibilities to say that without one there would be loose ends not completely tied up, things mismanaged and possible delays that could cost real cash. All of that aside, it is also such a truly wonderful experience to work alongside a trusted professional that at the end of the transaction becomes a new friend and family member. Real estate professionals love what they do, they love real estate and people and sheepherding you through the home buying or selling process is what it’s all about to us.

Justin Noble is a Realtor with Sotheby’s international Realty licensed in D.C., Maryland, and Delaware for your DMV and Delaware Beach needs. Specializing in first-time homebuyers, development and new construction as well as estate sales, Justin is a well-versed agent, highly regarded, and provides white glove service at every price point. Reach him at 202-503-4243,  [email protected] or BurnsandNoble.com.

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