In 1845 a man named Andrew Fellows, the first to have a permanent residence in the area we know as Milwaukie today, builds a small cabin approximately at the site of today's intersection of McLoughlin and Jefferson. Two years later a man named Lot Whitcomb, a pioneering entrepreneur, arrives and takes over Fellows' abandoned cabin.
Read MoreNew Year, New Tax Situation /
As you can imagine, clients have been asking me how the new tax law will affect Real Estate so I’ve outlined some changes to be aware of.
Mortgage Interest Deduction:
The final bill reduces the amount deductible from $1 million to $750,000. This is for mortgages taken out after 12/14/2017. Mortgages taken out before that are grandfathered in.
Homeowners may refinance mortgages which were in place on 12/14/2017 and deduct up to $1 million in interest as long as the homeowner does not increase the amount of the mortgage.
Interest paid on Home Equity Lines or second mortgages are no longer deductible unless they are/were used to substantially improve the property. This applies to all loans that fall into this category, regardless of when they were taken out.
Interest on second homes is still deductible up to $750,000 after 12/14/2017.
Deduction for State and Local Taxes:
Up to $10,000 total state and local property taxes and income tax may be deducted. Note that the law states that these amounts may not be “prepaid” in 2017.
Capital Gains on the Sale of Real Estate:
Capital gain exemptions for primary residences remain the same. Individuals can gain up to $250k and couples can gain up to $500k without incurring capital gain.
The law left in place the ability to avoid paying capital gain on investment Real Estate by exchanging into like-kind properties (1031 exchanges). It repealed non-real estate personal property exchanges formally allowed under Section 1031.
Moving Expenses:
These will no longer be deductible except for military personnel. This will definitely affect how relocation departments handle job transfers.
End result for Real Estate
Due to the cap on itemized deductions, and the increase in the standard deduction, most potential home buyers will find that the “homeowner tax advantage” is substantially reduced, as they will end up using the standard deduction instead of writing off their mortgage interest and property taxes.
Here are examples of how this new law will affect two potential homeowners as figured by the National Association of Realtors.
End result for Oregonians
This tax cut clearly favors the wealthy and corporations, as the largest (and longest lasting) changes fall on their side of the table. It also favors states that have lower taxes. According to the Oregon Center for Public Policy, Nearly one in ten Oregonians will see a tax increase. The highest-earning 1 percent of Oregonians can expect an average tax cut of over $33,000 in 2019, while the lowest-earning 60 percent of Oregonians will average a $430 tax cut.
End Result for Americans
As the tax cuts for individuals expire after 2025, the final analysis must look at what happens over the next 10 years. This chart shows the effect the tax law will have on different income earners after the reductions expire. This analysis does not take into account the effect the reduction in revenue will have on infrastructure, education, healthcare, and social services.
As you can see from these examples, there are many factors that go into how you are taxed, so if you have specific questions about how this will impact your personal tax liability, be sure to check with a professional.
She Flies with Her Own Wings /
Our state motto rings true; Oregon does indeed fly with her own wings but that does not mean she doesn't need our support. There are incredible programs in our state–protecting our natural resources and helping our citizens thrive–and they need our contributions to ensure that their important work continues.
We proudly support the following organizations because they address critical needs in our community, and all have 5-star ratings on Charity Navigator.
We invite you to join us as you consider your year-end giving!
Architectural Heritage Center. Educating and encouraging Portland to understand and preserve our cultural heritage through historic buildings and places.
Friends of the Columbia Gorge. If the Gorge is an important place to you or someone you love, sign up to be contacted in the spring when trail restoration volunteers are needed. (and it's free!)
Join PDX. Helping Portland's homeless individuals and families transition from homelessness to permanent housing.
Open Signal. Offers skills, equipment, training, inspiration, and access to thousands of local voices on five cable channels.
Oregon Energy Fund. Providing energy assistance to thousands of Oregonian's in times of unexpected crisis.
Oregon Environmental Council. Protecting the health of all Oregonians by working for clean air and water, a healthy climate, and an unpolluted landscape.
Oregon Food Bank. A formidable force in the statewide distribution of food to food banks and other partner agencies and a powerful advocate in the fight to eliminate the root causes of hunger.
Borrow Instead of Buy! /
A tool library is just what it sounds like. It works like a traditional library but instead of lending books, they lend members tools. There are four tool libraries in the Portland Metro Area: Northeast, Southeast, North Portland, and Lents.
If you think about it, tool libraries are a democratizing force in the realm of home improvement, making expensive equipment that a homeowner or renter needs–often for a single project–accessible. Becoming a member is easy; it only requires that you bring a valid photo ID and proof of your current address to show that are a resident of the neighborhoods served by that specific tool library.
Think about becoming a member or making a donation to keep these all-volunteer libraries going. And know that these libraries have tools for every kind of home project you could imagine plus tools for auto and bicycle repair! The Southeast Tool Library is hosting a FREE Home Weatherization Workshop by The Community Energy Project on December 7th. Find details and register to attend here.
Safety First, Coziness Second: Caring for Your Fire Extinguisher /
This is the time of year when we light fires as the sun sets at 4 pm, string up lights on every square inch of our homes inside and out, and cook and bake to our heart's content. Some of the indulgences of winter can put us at greater risk of fire in our homes.
Fire extinguishers are the first line of defense against frightening flames in the home. Get one if you don't already have one and make sure everyone in your home knows where it is. Keep in mind that an extinguisher is only helpful to you in an emergency if it works. Manufacturers recommend that you inspect your extinguisher monthly checking to see that:
- The extinguisher is not blocked by equipment, coats or other objects that could interfere with access in an emergency.
- The pressure is at the recommended level. On extinguishers equipped with a gauge, the needle should be in the green zone–not too high and not too low.
- The nozzle or other parts are not hindered in any way.
- The pin and tamper seal (if it has one) are intact.
- There are no dents, leaks, rust, chemical deposits and/or other signs of abuse/wear. Wipe off any corrosive chemicals, oil, gunk, etc. that may have deposited on the extinguisher.
Beyond familiarizing yourself with your fire extinguisher, it's a good practice to take it to a professional annually–or as often as the manufacturer recommends–for regular maintenance.
We may have gifted you a fire extinguisher when you moved into your home. Recently we discovered that one of the models we gifted has been recalled. If this is the fire extinguisher you have–whether we gave it to you or not–please let us know and we will get you a replacement!
Give Portland for the Holidays /
We live in a wonderland when it comes to proximity to forests, rugged coastlines, and the bounty of local, handcrafted goods and experiences available to us at all times. Whether you like to give holiday gifts that are things or things to do, you can find everything you need for friends, family, and colleagues right here in town.
People in Portland are making art, stationery, apparel, housewares, self-care products, coffee, workshops, chocolate, booze, and music and all that great local stuff is giftable! We compiled a list of some of our favorite shops, makers, and experiences to help you get ready for the holidays.