(Because a lot of accountants will be retiring after this tax season.)

I watched an 8-hour webinar for accountants on Mr. Trump's new tax law. The morning session was informative and understandable. I've been practicing accounting for over 50 years. I started with the 1954 Tax Act (a loooong time ago). In 1986 Congress passed a new tax law that was like playing baseball to playing football. New rules, but they were understandable and we (accountants) learned them and we've been working with them for some 32 years. Mr. Trump's (I won't call him president Trump) 2017 Tax Reform Act is a joke. It gives unreal benefits to the rich. There will be a lot of easier returns because he eliminated the "Other Itemized deductions" on schedule A, which eliminated "Unreimbursed Employee Business Expenses" for all W - 2 wage earners eliminating union dues for actors, tax preparation fees, investment expenses and a whole host of legitimate itemized deductions.

He then came up with his 20% exclusion of earned income from many sources. A good thing!!! But, it is not as it appears as it is the most complicated computation the tax returns have ever seen. And to put a topping on it, The IRS has not come up with procedures to deal with it yet. It is a compilation of an earned income computation, an asset computation and a wage and salary computation that Einstein could not figure out. Like I said, I've been practicing accounting and taxes for over 50 years and this is the worst piece of tax legislation I have ever seen.  By the way, the withholding tables were lowered meaning that less Federal and State withholding taxes will be taken from your paycheck.  That means that you will either get less of a refund, get no refund or have to pay something.  Isn’t life grand!!!

Add all the above to the $10,000 limitation on all taxes on Schedule A and you just hurt New York and California with high income taxes and property taxes. Aren't those BLUE states??? They also cut the mortgage interest deduction to $750,000 in mortgages. How much is an expensive house in Mississippi? Is the answer $200,000? How much is an average house in Los Angeles? Is the answer over $1 million? Who just got hurt? Was it the BLUE state?

I'm supposed to be talking about taxes here but he is an international embarrassment, an angry man seeking vengeance, a politician who lies and lies and lies, and an all around blowhard. I cannot wait for the mid term elections. By the way, the last paragraph was an editorial comment, the rest was not.

I went to a class on taxes yesterday for accountants only to find out that the government is far behind its estimates for getting the new tax law on forms that will work for next tax season. The President proposed the law, a Republican Congress passed the law but no one asked the Internal Revenue Service how the law will work. There are so many unknowns that I figure that the final forms will not be ready from the Internal Revenue Service until February 2019. That will play havoc with the timing of filing everyone's 2018 tax returns. That's what I call good planning!!! The Internal Revenue Service is not even close to figuring out what Congress meant by a lot of the changes and provisions. This is one reason I am happy that I changed from being a CPA for many years to a realtor with Pinnacle Estate Properties in Calabasas, California.

No one else had over 50 years of being a CPA and having the Tax Experience who is presently a Realtor who can help you Buy, Sell or Invest in Real Estate and give you the right advice.

I MAY NOT BE UNIQUE – BUT I’M ONE IN A MILLION!!!

I want to announce that we are redeveloping the corner (triangle) of Moorepark and Fulton in Sherman Oaks. We are in the planning stages, but it should be ready around the end of 2018. It will be more than a face lift, it will be a reconstruction of the present layout, and it will become a central place in Sherman Oaks with greenery, trees and seating along with office space and, maybe, some retail outlets.

INTEREST AND TAXES

Now that tax season is officially over, except for those taxpayers on extension, we can turn our attention to how the new tax law is affecting all of us. 

We have all been told that the mortgage interest deduction on Schedule A (Itemized Deductions) is limited to the first $750,000.00 of mortgages starting in 2018.  You can deduct any amount of interest, subject to IRS limitations, as Mortgage Interest on rental properties.  The $750,000.00 does not apply here.  Also, if you take out a mortgage and invest the money you can, again with IRS limitations, deduct that interest as Investment Interest Expense elsewhere on the tax return. 

Dealing with the Itemized Deduction for taxes on Schedule A we all have been made aware that the limit on that deduction is $10,000.00 for all taxes.  But, real estate taxes can be deducted, without limitation, on rental properties, investment properties or properties used in a trade or business. 

Please check with your CPA to get a better understanding of how these laws affect your tax return.

 Editorial Comment: I do not think that these limitations on interest and taxes will last forever.  I think that after the midterm elections there will be changes to the tax laws once again.

Busy week with both sales and home price reports. New home and existing home sales were nothing to write home about, however. One increased, the other was down, and neither really moved much at all. Existing home sales finally bore out the predictions from the previous three months of shrinking pending home sales data, while new home sales pulled out a slight gain.

To no one’s surprise, home prices continue to set new record levels. The rates of increase in the West were especially strong.

On November 19, 2017 I wrote a blog entitled "WHEN WILL THE BUBBLE BURST?"  Now, almost two months later I am getting conflicting information.  In the last article I said that the bubble should burst in the later part of 2018.

This week I read where the Real Estate market should have a good year in 2018 increasing by about 6%.  Someone else predicted that commercial property would shrink, as there will be less space needed to do manufacturing due to advances in technology.

I believe in the 6% increase. First, I'm the ultimate optimist.  Second, when you compare Los Angeles to the rest of the world we are somewhere in the middle of Real Estate affordability.  The world is shrinking every day technologically.  The wealth of knowledge doubles what seems to be every 20 minutes when it used to be (not so many years ago) 7 years.  Communication around the world is instantaneous! There are no time lapses except for Omaha Nebraska and Tucumcari New Mexico.  So prices in Paris, London and other major world cities are above ours and we might just be in the middle of catching up.

After all, except for New York and San Francisco we're a pretty important economy and the economy reflects itself in Real Estate prices.