The bulk of the new tax legislation leads to an overall reduction in incentive to be a homeowner. For example, the doubling of the standard deduction coupled with the reduction of deductibility of state taxes and mortgage interest make buying a home less tax advantaged. These tax changes will invariably increase demand for rental units.
Other notable news from the new tax legislation: 1031 exchange laws and section 121 laws were left unchanged. A 1031 exchange is a tax strategy which defers paying any capital gains tax on the sale of an investment property by rolling the proceeds over into a new investment property of equal or greater value. Section 121 is a popular tax break for homeowners which allows couples a capital gains exemption of $500,000 dollars on the sale of their primary residence ($250,000 for singles) provided that the home was used as your primary residence for two out of the past five years. Both the House and the Senate were proposing to increase this occupancy requirement to five out of the last eight years. This would have been a very harsh change for homeowners, further disincentivizing homeownership in America. One has to wonder why Congress is not interested in giving Americans more incentive to be homeowners, especially considering homeownership levels are at all time lows in spite of historically low mortgage rates. These new tax laws are making home ownership less attractive and renting more attractive. However, this is all good news for multifamily investors. I delve into some of these secular trends and more in my article: WHY MULTIFAMILY?
Other interesting impacts from these revisions can be seen by using a small family business in Pittsburgh as an example (Bloomberg). The effective tax rate will marginally increase for the very wealthy and marginally decrease for single individuals and median earners around the country. However, small businesses will experience a huge drop in taxes. This should hopefully result in the prosperity of average-priced markets such as Pittsburgh and fuel future growth (Top 10 reasons to invest in Pittsburgh). Another article about Pittsburgh: https://menloathertoncapitalpartners.com/pittsburgh-voted-best-place-to-retire/
Quick video on the topic: https://www.youtube.com/watch?v=ykGGU8JD0eg