On December 22 the final version of the Republican Tax bill was signed into law, and many believe it will benefit landlords. As part of the tax plan, two major aspects could impact home ownership and consequently rental demand, the reduction in the mortgage interest rate and the drop-in deductions for state and local property taxes. According to one estimate, homeownership could drop by 10% in counties that have high property and income tax. In addition, renters may be less likely to make that leap to buying a house if they know they are going to be hit with property taxes and mortgage interest that cannot be deducted from their income.
The mortgage interest deduction is one of the largest tax subsidies and accounts for 70 billion dollars a year. It is not yet fully known how exactly individuals losing these subsidies will impact the housing market and consequently the renting market. However, with housing supply falling 330,000 units short of demand last year leading to higher home prices, it is hard to imagine that more renters will choose to buy houses in 2018 and beyond with the added cost of only being able to deduce $10,000 in state, local and property taxes.
As a landlord it is important to take advantage of this era of renting. With demand for renting increasing and renters more likely and more willing to live in a unit for an extended period of time, it is important to maintain your rental property, finds stable and respectful tenants all while working to increase your profit margins.
With property management software landlords can fully take advantage of the rental housing boom by utilizing a property management system that includes an accounting system, document management and more. Contact RIS today for your free demo.
This post is provided by RISSOFT Residential and Commercial Property Management Software, specializing in innovative and cutting-edge property management software for all 50 states. Request a demo or contact us today to receive more information.
Disclaimer: The information provided in this post not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.