How Will the Tax Plan Affect Homebuying?
I was asked how the new tax plan will affect homebuying, and the short answer is that I don’t know. No one knows what it’ll do to the market.
I do know that in some states with high state taxes, it could affect purchasing power as the standard deduction for households is $10,000. Not all properties will exceed this in the District, so at least we have that going for us.
The National Association of Realtors is not happy with the tax plan, so I’m inclined to go with the experts on this, but whether this will cause home prices in the District to deflate is a wait and see. I think not, as the District is insulated from much of homebuying across the nation, and our taxes really aren’t too bad for a metropolitan area. But I know this has some people spooked – people who are thinking of selling, as well as renovators who think they may not get what they’ve been getting on the resale.
Here’s what I think – things are going to go on as normal for the next few years, because the changes in the tax returns aren’t even going to kick in until we’re doing our 2018 taxes in 2019. By then, who knows what other changes could’ve occurred – interest rates could’ve come down, there could be someone else in the White House … In the meantime, business as usual, I say!
When to Hold ‘Em, When to Fold ‘Em
Another question was from a couple who holds a rental property in another market. It had belonged to a family member, purchased by them two years ago. The couple doesn’t see themselves ever moving to this area to live, and it’s been difficult to find a new renter. The guy who has just given notice that he’s moving made it easy on them by doing everything that needed replacing or fixing himself and just charging them for the Home Depot run. Now they’re on assignment a half a world away and feeling like maybe they should just sell rather than having the mortgage and the hassle.
There are many parts to this. First, I can only talk about the market where I’m licensed, and I’m not licensed in the state where this property is located. Just in general, I think the market there is pretty strong with a major university nearby, and with a lot of people moving to that area, so I would hate for this couple to let the property go too early. They can make it easy on themselves by hiring an accountable property management company to find a renter and take care of necessary repairs if the next occupant isn’t handy.
I’m not a financial advisor, so not knowing their interest rate makes it hard for me to calculate against the income from the rental. I would also advise against selling too soon after the purchase – they just bought two years ago. So, I would say, hold it if you can, get a good property manager and give the property time to appreciate.
A January Refresher
What are you going to do with your house this year? Is it time to paint, remodel or sell? The new year is a great time to reassess your home. Try to look at it with objective eyes as you walk through. Are there dusty decorations that you don’t even see any more? How long have the slats been falling out of that bi-fold door?
You deserve to be surrounded with beauty and functionality, so if it’s not working, then it’s not working for you. You don’t have to have money to throw at it – sometimes just a reconfiguration of furniture will make a huge difference in the flow and feel of a room. If you want big impact for a small cost, paint color is huge. Do a charcoal wall hung with art to make a statement, or cozy things up with a warm gold. Make your bedroom a tranquil oasis with a calming sea blue (also blackout drapes are a must for sleeping in on weekends). And if you’re able, maybe it’s finally time to bite the bullet and fix the bathroom or kitchen like you’ve always wanted to. Yes, construction can be a nightmare – the dust, the picking out every little detail, but the end result should make you feel so happy to be there.
People often wait until they’re moving to make upgrades. Don’t do that – you’re worth fixing things for! Do it now so you can enjoy your efforts. Bathrooms and kitchens are where it’s at for resale, by the way, where you’ll recoup your expense. Cheers to you to a happy, healthy and fabulous 2018!
For February, I would LOVE to know what you LOVE about your home. Drop me a line.
Is there anything real estate-related that you’d like for me to explore? Email me about it and I’ll work it in. Please indicate if you wish your identity to remain a mystery.
Heather Schoell is a Capitol Hill REALTOR with Berkshire Hathaway HomeServices PenFed Realty and can be reached at [email protected], at the office at 202-608-1882 x111-175, or by cell at 202-321-0874.