Accountants, tax planners, bookkeepers, payroll companies and the public at-large are still trying to unpack all the implications of the new tax law. Guidance issued this week by the American Institute for Public Bookkeepers (AIPB) suggests that their members “Wait, where possible, for IRS guidance to confirm the details of the legislation. There are many technical errors in this tax law.”
However … one clear likely beneficiary of the new tax code is first-time home buyers. This is an important finding, because the robust housing market and unprecedented homebuilder confidence levels we’re currently experiencing tend to lead to higher priced homes. Without any additional gains in income or cashflow, potential home buyers — especially first-timers — can find it difficult to get into the property they desire.
However, as this Team Move/OVM Financial blog post details, the lower income taxes that most households will experience can become a positive factor in the criteria that determine how much home a buyer can qualify for. The new tax law is expected to provide higher child tax credits, lower tax rates and higher standard deductions for most. In the case of deductions, single payers’ deduction will be $12,000 and joint filers’ will be $24,000.
Always check with your CPA or tax specialist for clarification on how the tax code changes affect you specifically; but consider this scenario. If your household monthly cash flow is increased by $300, an increase in mortgage payments by $100-200 should be manageable. For prospective home buyers, a modest increase in qualifying monthly payments can open up access to more upscale neighborhoods or larger homes.
The professionals at Sanford’s Team Move office will be happy to help you determine how much home you qualify for, and can discuss the ramifications of increasing that number in the coming months. Call 919.777.0114 to schedule a no-obligation appointment.