January 28th, 2018 9:05 AM by Christopher Terry
Well, if you are looking to buy a property, new mortgages are capped at $750,000 for purposes of home mortgage interest deduction, down from the $1 million cap that we had through 2017. The cap on mortgage interest reverts back to $1 million in 2026 regardless of when the home was purchased.
Unless you have three-quarters of million dollars to put down on a house, that new tax law doesn’t exactly affect you. But, there is a new tax law that will affect almost all homeowners, and that is that tax deductions are capped at $10,000 for state and local sales, income and property taxes.
In states like New York, California and Massachusetts where home prices and property taxes are high, this change means some homeowners could face bigger tax bills beginning this year. The only way to take advantage of deductions related to homeownership is to itemize your tax returns.
And because the GOP tax bill roughly doubles the standard deduction for all taxpayers — i.e., it goes to $24,000 from $12,700 for married couples — the combined value of all your available deductions would need to exceed that new amount for itemizing to make sense.
There will be a lot of changes this upcoming year, and only time will tell how exactly they will affect the housing market.