A significant new piece of legislation, the “One Big Beautiful Bill Act,” was recently signed into law. While it’s a sweeping budget and tax bill, it contains key provisions that directly impact the housing and mortgage industries. Here’s a concise breakdown.
Key Takeaways for Homeowners and Homebuyers
- Permanent Deduction for Mortgage Insurance: The deduction for mortgage insurance premiums (like PMI, FHA MIP, and USDA guarantee fees) is now permanent, subject to income limitations. This is a significant long-term savings opportunity, reducing the effective cost of loans with less than a 20% down payment.
- Certainty on Mortgage Interest Deduction: The law makes the cap for the mortgage interest deduction permanent at $750,000 of home acquisition debt. This provides certainty for homebuyers, especially in higher-cost markets, allowing for better financial planning around a known limit.
- Temporary Increase in SALT Deduction: The State and Local Tax (SALT) deduction cap has been temporarily raised from $10,000 to $40,000 per household for 2025-2029. This may make homeownership more attractive for some buyers in high-tax states.
- Focus Remains on Local Down Payment Assistance: The bill does not include any new federal first-time homebuyer credits or down payment grants. It’s more important than ever to rely on state and local resources, like those from Housing Finance Agencies (HFAs), for down payment help.
- More Affordable Rental Housing: The law expands the Low-Income Housing Tax Credit (LIHTC). This is expected to increase the supply of affordable rental housing, which may ease competition for entry-level homes over time.
Wins for Real Estate Investors
The new law also locks in several benefits for real estate investor clients.
- Permanent 20% QBI Deduction: The 20% deduction for Qualified Business Income (QBI) under Section 199A is now permanent. Most rental real estate income qualifies, which helps lower the effective tax rate for investors.
- Key Investor Rules Preserved: The ability to deduct interest expenses for real property businesses remains intact. Furthermore, the popular Section 1031 like-kind exchange for real estate, which allows investors to defer capital gains, was unchanged.
This legislation provides stability and locks in favorable tax treatments for both homeowners and real estate investors. As your local mortgage expert in Magnolia, Texas, I’m here to help you navigate these changes and position you for success. Whether you are buying your first home or expanding your investment portfolio, understanding these rules is a strategic advantage.
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About Me: I’m Sal Trapani, a trusted mortgage broker and the owner of MJ Mortgage LLC, based in Magnolia, Texas. I work with homebuyers across Texas, helping them navigate the loan process with clarity, strategy, and confidence.
Sal Trapani, Mortgage Broker/Owner, MJ Mortgage LLC, 281-608-2846 cell, sal@mjmortgagellc.com, www.mjmortgagellc.com NMLS 1055510 / NMLS 2381195
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