While many people are in jovial moods preparing for the coming holidays, others are worried about such things as upcoming U.S. Senate elections and fall out from the current tax bill. Indeed, the changes that could occur from the tax bill alone are the subject of major conversation whether online or during a holiday cocktail party. This is due in large part to the fact that the bill, in its current form, limits some of the biggest incentives for buying a home, according to Bloomberg News. This means that people could stay in their current homes even longer, contributing to what is already reported to be a housing shortage. This, coupled with the bursting trend of expensive, luxury developments in most major cities could create even greater cultural disruption in our country. Many also rely on real estate investing to increase financial security, and this too could be a bit trickier with the new bill. So how to best lay the course within the real estate arena for the coming year?
First it’s about arming yourself with as much knowledge as possible. According to real estate investor Andy Dane Carter, “If the bill does, in fact, pass in its current form, the best way to navigate this current situation in 2018 if you are an investor is to own everything in a pass-through corporation.” Carter says that it’s best to acquire and hold all assets in an entity such as S-corp of LLC, for example. “And if the corporate tax rate drops to 20 percent,” Carter continues, “buy everything you can afford, as an investor. For example, if you flip houses you will go from 39.7 percent tax down to only 20 percent. You can buy a lot more real estate with those tax savings.”
However, it may not be this simple. Carter notes that corporate tax cuts could help to create massive growth and expansion in the country, but since the mortgage and property tax deduction is being slashed for the average home owner, the overall real estate market could suffer from stagnation and other ills in the future. Indeed, Jack Citrin, a UC Berkeley professor who has written several books about California tax policy sees the state, in particular given its high taxes, suffering from fall-out of the tax bill in its current form.
Thus, one will need to be savvy and move quickly when opportunity hits. As Carter mentions in his book, “100 Doors,” the power of the intersection of technology and real estate can be a major aide. “I believe that we are in a mobile first environment,” he explains. “I can pull up to the property pull out my phone and get real time data using the right real estate apps. I use them daily in my business. Speed is everything in a market that is going up and that is going down. These apps add tremendous value to the regular homeowner and home buyer to stay in the game daily. They also increase engagement between the broker and client as well. In essence, they give extra layer of accountability which is important to keep in mind.”
Indeed, as many begin to plan for the new year, additional tools and expertise will be high on the priority list when it comes to any and everything pertaining to the real estate arena. 2018 could very much be about the very basics of shelter as a major, growing concern in our culture.