What is Crowdfunding?
Crowdfunding harnesses the power of social networks and the internet to give people the means to raise funds, help others overcome hardship, and meet aspirational goals. With crowdfunding, you can do everything from helping a friend pay for surgery to fulfilling a student’s dream of attending college, supporting a cause you believe in to helping an entire community recover from disaster.
In recent years, crowdfunding has transformed the traditional fundraising landscape, breaking down barriers between those in need and those available to help them—and making it possible for people to offer direct support to those who need it most. This is part of a larger trend toward individual giving. In 2016, charitable giving by individuals grew by 3.9% for a total of $281.86 billion, outpacing giving by both corporations and foundations.
FHFA Increases Conforming Loan Limits
Federal Housing Finance Agency (FHFA) announced that it will increase the 2018 conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac to $453,100 on one-unit properties and a cap of $679,650 in high-cost areas. The previous loan limits were $424,100 and $635,150, respectively. The conforming loan limit determines the maximum size of a mortgage that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming or “jumbo loans” typically have tighter underwriting standards and carry higher mortgage interest rates than conforming loans.
2018 Tax Reform and Real Estate
On December 22, 2017, the tax bill known as the Tax Cuts and Jobs Act was signed into law by the President. Amongst the many areas of the tax code that the TCJA affects, real estate taxes and mortgage interest deductions are some of the biggest changes.
Two of the most discussed provisions in the TCJA affecting California are the State and Local tax (SALT) deductions and the mortgage interest deduction The TCJA imposes a $10,000 combined cap on all SALT deductions whether they are for real property taxes, state or local income taxes, or sales taxes. This will primarily affect high-tax states such as California. The $10,000 limit applies to both single and married filers and is not indexed for inflation.
The mortgage interest deduction for existing mortgages of up to $1 million taken out before December 15, 2017, will not be affected. Homeowners may also refinance mortgage debts existing on December 14, 2017, up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
For any new loans, however, the cap for deduction will be $750,000. Deduction of interest on loans secured by a second house will still be allowed subject to the $1 million and $750,000 caps.
The interest on home equity loans will only be deductible if the proceeds are used to substantially improve the residence.
DAVID S. FISHER, ESQ.
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