OHA Market Update Feb 20, 2025
National Real Estate Update:
Housing Trends, Interest Rates, and Market Forecasts
House Hacking Tax Benefits: Save Money & Build Wealth
House hacking is a real estate strategy where homeowners rent out part of their home to help cover their mortgage and generate passive income. This approach has grown in popularity, especially as homeownership has become more expensive.
Tax Benefits:
House hackers can take advantage of various tax deductions, including:
Mortgage Interest Deduction – Up to $750K in mortgage debt interest can be deducted.
Property Taxes – Up to $10K deductible, with rental portions exempt from the cap.
Depreciation – The rental portion of the home can be depreciated over 27.5 years.
Repairs & Maintenance – Costs for tenant-related repairs are deductible.
Utilities & Expenses – A portion of shared expenses like internet and electricity can be written off.
Home Office Deduction – If managing the rental, part of the home can qualify as a deductible office.
Selling & Tax Implications:
When selling, homeowners may qualify for the Section 121 exclusion, which allows up to $250K ($500K for joint filers) of capital gains to be tax-free—but only for the portion of the home used as a primary residence. The rental portion is subject to capital gains tax unless strategic planning extends the time lived in the home.
House Hacking vs. Flipping:
While house hacking builds long-term equity and reduces housing costs, it requires tenant management. Flipping houses offers faster returns but comes with higher risks and tax burdens.
OHA’s HOT TAKE:
House hacking isn’t just about lowering housing costs—it’s a powerful way to build wealth, generate passive income, and break into real estate. The tax benefits make it even more rewarding, reducing taxable income and maximizing returns.
For first-time buyers, it’s a low-cost entry into investing, while strategic tax planning helps homeowners keep more profits when selling. With rising costs and high rates, leveraging tax breaks through house hacking can make homeownership more affordable and financially smart.
Thinking about house hacking? Find the Perfect Home with Open House Austin!
Austin Area Real Estate & Community Update:
Market Trends, Local News, and Neighborhood Insights
Housing Market Update: Price Cuts Rise, Demand Lags, and Mortgage Rate Uncertainty Continues
According to Zillow - Sellers are increasingly cutting prices to attract buyers struggling with high mortgage rates, with nearly 23% of listings seeing reductions in January—a record for this time of year—while new listings continue to rise, giving buyers more negotiation power in many markets.
Real Estate News says - Rising inflation and strong economic data have dimmed hopes for mortgage rate relief, with analysts now expecting just one rate cut in 2025—if any—while high borrowing costs continue to constrain housing supply.
Resarch from Redfin shows - Homes sat on the market for a median of 56 days in January—the longest for any January since 2020—highlighting sluggish demand despite increased inventory.
MBA (Mortgage Bankers Association) found - Mortgage applications rose 2.3% last week, driven by a 10% increase in refinancing activity, while purchase applications declined by 2% despite slightly lower mortgage rates.
Mortgage News Daily reported that the 30-year rate rose to 7.13% immediately following the CPI report but dropped to 7.04% on Feb. 13.
OHA’s HOT TAKE:
Right now, there are more homes on the market, and many sellers are lowering prices to attract buyers, giving you more negotiation power. While mortgage rates are still high, the increase in inventory offers more options. Experts don’t expect significant rate cuts in 2025, but staying informed from multiple sources helps us navigate the market and helping you make the best choices for you.
If you're thinking about buying or selling, let's chat about how we can make the most of the current market.
Jennifer Carey
Realtor and Agent Success Manager at Open House Austin, real estate investor, and renovation enthusiast with Wimberley Airbnbs. She loves mid-century modern design, hiking Austin with her dogs, yoga, and exploring creative hobbies like painting, pottery, and piano. 🎶✨
