That Time Again
Now that April’s Fools Day has passed, we can get down to some serious business. And the first order of business each month is the release of the employment report. Each report seems to have a special meaning with regard to the economy, and this month the job numbers will be no exception. In February we had very strong employment growth, and we will be watching for any revisions of February’s numbers, as well as focusing on the data for the month of March.
Two very strong months could signal the Federal Reserve Board to move up their timeline for rate increases this year. As of their meeting in March, they are sticking with an estimate of three increases this year and the markets have already built in at least some of these increases. If the numbers ease back and there is any significant downward revision for February, then the focus will shift the growth of wages.
Right now, the Fed is not only looking at a strengthening economy, but also how this growth will affect the inflation rate. Any evidence of increased pricing would also serve as justification for future rate increases. While increasing wages are great news for the American worker, any acceleration of the growth of wages could be felt by consumers in the form of higher rates. The best scenario for Friday? Solid growth in jobs and wages, but just not too hot.
Some tax deductions for home sellers may amount to potentially big savings. As such, homeowners who are selling their home soon or sold it last year will want to educate themselves on the tax deductions available. Realtor.com® recently highlighted some, including:
- Selling costs: “You can deduct any costs associated with selling the home—including legal fees, escrow fees, advertising costs, and real estate agent commissions,” says Joshua Zimmelman, president of Westwood Tax and Consulting in Rockville Center, NY.
- Home improvements and repairs: Some renovations done to make a home more marketable for resale may be eligible for a tax break. “If you needed to make home improvements in order to sell your home, you can deduct those expenses as selling costs as long as they were made within 90 days of the closing,” says Zimmelman.
- Property taxes: You can deduct the amount you paid in property taxes for the time you owned the home. This has been capped at $10,000 in total deductions, starting in 2018.
- Mortgage interest: You can deduct the interest on your mortgage for the amount of time you owned the home. Starting in 2018, new homeowners and sellers can deduct the interest on up to $750,000 of mortgage debt. Homeowners who had a mortgage prior to Dec. 15, 2017, can continue to deduct up to $1 million under the old law, Zimmelman says.
- Capital Gains Exclusion: Capital gains are your profits from selling a home. Those profits are taxed as income, but you can exclude up to $250,000 of the capital gains from the sale if you’re single and up to $500,000 if filing as a married couple. To be eligible, you must have lived in your home at least two of the past five years. Source: Realtor.com®
Landlords own thousands of single-family homes across the U.S. With housing shortages abounding, some are calling on landlords to start selling. A slowdown in rent growth may convince more to finally unload their inventories. “As new multifamily supply catches up with demand and slows rents, some large investors may begin putting their holdings of affordable single-family homes up for sale, which would be great news, particularly for first-time buyers,” says Lawrence Yun, chief economist of the National Association of Realtors®. A jump in apartment construction has slowed rent growth for many multifamily buildings across the country, but single-family landlords are still mostly reaping profits. Invitation Homes Inc., the nation’s largest single-family landlord, owns more than 80,000 properties. It is forecasting its revenue growth to be about 4 percent to 5 percent in 2018, which far outpaces rent-growth projections for apartments, according to Green Street Advisors LLC, a research firm. “Single-family rental top-line growth should continue to fare much better than that of apartments due to steady demand and limited impact from competitive new supply,” Green Street Advisors note in a recent report. Source: Bloomberg