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Prepping For Tax Season?

Prepping for Tax Season?

Tax season is upon us! Here are a few mortgage and homeowner tax tips to keep in mind during filing.

1.)    Home Mortgage Interest Deduction. THIS DEDUCTION HAS BEEN MODIFIED FOR 2018 TAX FILING.  Only interest from acquisition indebtedness used to buy, build or update your home up to $750,000 ($375,000 for married taxpayers filing separately) can be deducted. Effective with residences purchased Dec 15th, 2017 or later.

What does this mean?

  • Location matters when buying homes. Purchasing a home in a high price and high property tax state can be pricier given the new restrictions.
  • If a client has a second home, they will need to keep in mind that the the interest rate deduction are reducing from $1 million to $750,000.

 

2.)    Property Tax Deduction Changes. The new tax plan has a limit of $10,000 on the amount of state and local property taxes that can be deducted from a home.

What does this mean?

  • If you pay more than $10,000, then the impact of the new bill depends on how much you pay in state income taxes, and exactly how much your property taxes exceed $10,000.
  • If your state income taxes are low (or zero), and your property taxes are not too much higher than $10,000, then the increased standard deduction will probably offset the new $10,000 cap on the state and local tax deduction.

 

The information contained here is educational only. Always consult with a tax professional/ advisor for further information regarding the deductibility of interest and charges.

 

Sources:

https://www.irs.gov/site-index-search?search=Mortgage&field_pup_historical_1=1&field_pup_historical=1

https://www.forbes.com/sites/kellyphillipserb/2018/03/07/new-irs-announces-2018-tax-rates-standard-deductions-exemption-amounts-and-more/#6eb492733133

https://www.pennymacusa.com/blog/2018-tax-changes-mortgage-interest-deductions-for-homeowners

 

 

 

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