Real Estate Under The New Tax Plan

Dated: 01/08/2018

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1031 Exchanges - Depreciation and more has been saved for Real Estate Investment and Personal Residences!


Tax Plan


Investment Property in the Portland Metro Area

Major Provisions Affecting Commercial Real Estate

Like-Kind Exchanges

  • The final bill retains the current Section 1031 Like Kind Exchange rules for real property. It repeals the use of Section 1031 for personal property, such as art work, auto fleets, heavy equipment, etc.

  • The exclusion of real estate from the repeal of 1031 like-kind exchanges is a major victory for real estate stakeholders, who had fought hard to preserve the provision for several years, and against long odds.

Carried Interest

  • The final bill includes the House and Senate language requiring a 3-year holding period to qualify for current-law (capital gains) treatment.

  • Again, real estate stakeholders prevailed against long odds to preserve the incentive of capital gains treatment for carried interests in the final legislation.


Exclusion of Gain on Sale of a Principal Residence

  • The final bill retains current law. A significant victory in the final bill that NAR achieved.

  • The Senate-passed bill would have changed the amount of time a homeowner must live in their home to qualify for the capital gains exclusion from 2 out of the past 5 years to 5 out of the past 8 years. The House bill would have made this same change as well as phased out the exclusion for taxpayers with incomes above $250,000 single/$500,000 married.

Mortgage Interest Deduction

  • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.

  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.

  • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.

  • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.

  • The House-passed bill would have capped the mortgage interest limit at $500,000 and eliminated the deduction for second homes.


Information provided by the National Association of Realtors. Consult your tax professional as individual tax obligations vary and we are not tax professionals.



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