MORTGAGE INTEREST DEDUCTION (primary residence and second homes)
Beginning January 1, 2018, the mortgage interest deduction cap is reduced to $750,000, instead of $1 million, for people who bought homes after Dec. 15, 2017.
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Mortgage Interest |
Tax law through 2017 You may deduct the interest you pay on mortgage debt up to $1 million ($500,000 if married filing separately) on your primary home and a second home. |
Tax Law beginning in 2018 For homes bought before Dec 15, 2017*, there is no change. For homes bought after Dec.15, 2017, you may deduct the interest your pay on mortgage debt up to $750,000 ($375,000 if married filing separately). |
*The bill carves out an exception for people who were under contract to buy a home before Dec. 15, 2017, as long as they were scheduled to close by Jan. 1, 2018, and actually closed by April 1, 2018.
PROPERTY TAX DEDUCTION
The old law allowed qualifying taxpayers to reduce their taxable income by the total amount of property taxes they pay. Starting in 2018, individuals will be limited to a $10,000 deduction for the cost of state taxes, property taxes, and sales taxes.
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Property Taxes |
Tax law through 2017 You may deduct the property taxes you pay on real estate you own. |
Tax law beginning in 2018 You may deduct up to $10,000 ($5,000 if married filing separately) for a combination of property taxes and either state and local income taxes or sales taxes. |
HOME EQUITY DEBT
Prior to 2018, the tax law gave a deduction for interest paid on home equity debt “for reasons other than to buy, build, or substantially improve your home.”
The 2018 tax bill eliminates the deduction for interest paid on home equity debt.
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Home Equity Debt |
Tax law through 2017 You may deduct interest on up to $1,000 of home equity debt ($50,000 if married filing separately). |
Tax law beginning in 2018 Eliminates the deduction for interest on home equity debt.
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Inga Modu-Rella
Lic. R.E. Salesperson