TAX REFORM - Its Impacts On California Real Estate

2017 Q-4, Report - Major Impacts on Values and Market Activity???

(This is a printable version)

WOW, 2017 Ended with a Major Tax Overhaul

While the Tax Reform had been widely anticipated we are sure there are many caught a little by surprise.

Our personal opinion is the changes are great for the overall US economy but will likely bring a little discomfort to many California home owners and could bring a lot to the wealthier individuals in those states with high state income tax and property tax rates.



It is still early in the information distribution and education process. Most CPA's will receive the new tax codes by the end of January. At that time the way this impacts each of us personally will become more evident.

In the meantime, many organizations are studying, analyizing and disseminating industry specific impacts to its constituents.

As it relates to REAL ESTATE, the CALIFORNIA ASSICIATION OF REALTORS (CAR) has prepared some preliminary information for Realtors to share with their clients.

Below is a comparison prepared by CAR. We have other information they have prepared and would be glad to share it upon request.



Tax Reform Law Chart: Prior Law vs. New Law

Provision of Interest to Real Estate Professionals

The following chart was prepared and provided by the California Association of Realtors (CAR). A copy is available at this link.

Prior Law Current Law
Mortgage Interest Deduction Capped at $1,000,000 Capped at $750,000 on Mortgages generated after December 14, 2017.
State and Local Tax Deduction (SALT) Unlimited The total of Income, Sales and Property Tax deductions is capped at $10,000
Capital Gains Exemption on Sale of Primary Residence Exclusion of up to $250,000 ($500,000 if married) of gain realized on sale or exchange of principal residence if lived in for 2 of last 5 years No change
1031 Like-Kind Exchanges Applied to all classes of property (e.g., personal and real Limits non-recognition of gain to real property
Personal Deduction Allowed Eliminated
Standard Deduction $6,350 individual and $12,700 if married $12,000 individual and $24,000 if married
MID for second Homes Capped at $1,000,000 Capped at $750,000
Home Equity Loan Deduction Capped at $100,000 Not deductibleunless the proceeds are used to substantially improve the property
Moving Expense Exclusion andDeduction Deduction for moving expenses incurred in connection with change in work place Deduction for moving expenses incurred in connection with change in work place
Child Tax Credit $1,000 for each child $2,000
Deductionfor Qualified Business Income of Pass-Through Entitiesincludingindependent contractors None 20% deduction of taxable income phased out above $157,000 ($315,000 if married) for brokerage services
Depreciation Recovery Period for Real Property (Residential Rental) Recovery Period is 27.5 years No Change
Depreciation Recovery Period for Real Property (nonresidential) Recovery Period is 27.5 years No Change
Depreciation Recovery Period for Real Property (Leasehold improvements) Recovery Period is 27.5 years No Change


The reports found in the links below are for the end of the third quarter of 2017. Each is a full report for the specific neighborhood. Our next Newsletter will have these reports updated through the end of 2017. The Year-end reports are finished and available upon request. If you need to see the Year-end Results, please contact us. It would be our pleasure to share them.


CLICK on each link to review a community:

  1. Newport - West Bluff / SAH SFR          Single Family Residential (SFR) 
  2. Irvine - Turtle Rock.........SFR             1500 sf  & larger 
  3. Irvine - Turtle Rock.........Condo        1100 sf & larger
  4. Irvine - Woodbridge........SFR             1500 sf & larger
  5. Irvine - Woodbridge........Condo        1400 sf & larger
  6. Irvine - WestPark............SFR             900 to 3200 sf
  7. Irvine - StoneGate...........Condos      1500 sf & larger
  8. Irvine - Portola Springs....SFR            1500 sf & larger
  9. Irvine - Portola Springs....Condo       1500 - 3000 sf
  10. Foothill Ranch.................SFR            1500 sf & larger
  11. Portola Hills....................SFR            1500 sf & larger
  12. Coto de Caza...................SFR             $600,000 to $999,000
  13. Coto de Caza...................SFR             $1,000,000 to $2,000,000
  14. Ladera Ranch .................Condo        1100 to 1800 sf
  15. Ladera Ranch..................Condo        1801 sf & larger
  16. Ladera Ranch..................SFR             1500 to 3000 sf
  17. Ladera Ranch..................SFR             3001 to 4650 sf



We have data on about 32 neighborhoods can develop a report for any neighborhood in California.



Next Report:

We suggested in September our next report would be our 2017 full year wrap up and some early predictions for 2018.  Because of the impact and significance of the Tax Reform we focused on that in this reports.

We will get the 2017 Market Summary Newsletter out by February 1, 2018.

One thing all buyers and sellers should expect is rising interest rates. 

We anticipate this could make it harder for buyers to qualify.  


Contact: Joe Richter  949 769-2000
949 677-7722 (cell & text)

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CA CLB B-861134 ~ CalBRE 01744150 ~ CalBRE 01980301 ~ OR REA 201008092