What the New Tax Law Means for Homeowners
The end of year passage of the Tax Cuts and Jobs Act is the most comprehensive tax code revision to take place since 1986. While the tax reform changes will not impact your 2017 return, some workers might see the changes to their paychecks as early as next month.
The biggest question for the housing community is how will the tax update impact homeowners?
Individual Rates Lowered
The individual rates are getting lowered across all seven tax brackets. So, in 2018, most taxpayers will likely be getting a tax cut.
Standard Deduction Doubles
For individuals, the standard deduction will be raised to $12,000. For joint filers, the standard deduction will be raised to $24,000. For some taxpayers who itemize, it may make more sense to take the standard deduction next year.
State and Local Deductions are Capped
For taxpayers who choose to deduct property, income, and sales taxes, this deduction will be capped at $10,000. In some high tax cities and states, this will have a significant impact.
Mortgage-Interest Deduction Drops
For new mortgages originated, the mortgage interest tax deduction will be capped at $750,000. Most home values do not exceed $750,000, but this will impact homeowners in high-cost cities and states.
If you’d like to learn more about the Tax Cuts and Jobs Act, it is best to consult a tax advisor.
Sources: CPMS Institute, Curbed