flexiblefullpage - default
Currently Reading

On the New Tax Reforms

billboard - default

On the New Tax Reforms

NAHB Housing Policy Briefing

February 8, 2018
U.S. Capitol
Photo: Pixabay
This article first appeared in the February 2018 issue of Pro Builder.

The tax reform bill signed into law by President Donald Trump on Dec. 22 will provide tax relief for hard-working families and create a more favorable tax climate for small business. The National Association of Home Builders (NAHB) worked hard to make sure the final bill included key provisions that support the housing industry, such as the real estate exception to the business interest deduction, private activity bonds, and the capital gains exclusion.

The Tax Cuts and Jobs Act took effect for the tax year that began Jan. 1, 2018. Major provisions of the law include:

Mortgage interest deduction. Retains the mortgage interest deduction and the deduction for second homes but reduces the mortgage interest cap from $1 million to $750,000.

State and local property taxes. Allows taxpayers to deduct up to $10,000 of state and local taxes, including property taxes and the choice of income or sales taxes.

Capital gains exclusion. Maintains existing law that allows homeowners to exclude up to $250,000 (or $500,000 for married couples) in capital gains on the profit from the sale of a home if they have lived in the house for two of the last five years.

Private activity bonds (PABs). Retains PABs, which will enable the Low-Income Housing Tax Credit to maintain its effectiveness as the most indispensable tool for the production of affordable housing.

Alternative Minimum Tax. Eliminates the Alternative Minimum Tax (AMT) for corporations and increases the AMT exemption amounts and phase-out thresholds for individuals.

Pass-through deduction. Allows most home builders with pass-through income to deduct up to 20 percent of that income based on wages or on wages plus a capital element.

Business interest deduction. Provides the taxpayer a choice of making a one-time election for a deduction limited to 30 percent of adjusted gross income or, for real estate, a 100 percent deduction for business interest but with certain trade-offs.

Estate tax. Doubles the estate tax exemption.

Carried interest. Retains existing carried interest rules, but assets must be held for three years.

Individual tax brackets. Retains seven tax brackets, with rates ranging from 10 percent to 37 percent.

Home equity line of credit. Eliminates the deduction for interest on home equity loans. 

leaderboard2 - default

Related Stories


See Interior Designer Bobby Berk's Latest Collaboration With Tri Pointe Homes

In an exclusive video for Pro Builder, interior design expert and Emmy-winning TV host Bobby Berk introduces his latest designs for Tri Pointe Homes

Forty Under 40

2024 Forty Under 40 Nomination Form

Help us recognize the rising stars, innovators, and game-changers in the housing industry!

Market Data + Trends

Housing Market Index Shows Builder Sentiment Continues to Rise

In March, builder confidence in the market for newly built single-family homes hit its highest level since July 2023

boombox1 -
native1 - default
halfpage2 -

More in Category

Home builders can maximize efficiencies gained through simplification and standardization by automating both on-site and back-office operations 

Delaware-based Schell Brothers, our 2023 Builder of the Year, brings a refreshing approach to delivering homes and measuring success with an overriding mission of happiness

NAHB Chairman's Message: In a challenging business environment for home builders, and with higher housing costs for families, the National Association of Home Builders is working to help home builders better meet the nation's housing needs

native2 - default
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.

Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.