Homeowner Tax Changes

The new tax law that was signed into effect at the end of 2017 will affect all taxpayers. Homeowners should familiarize themselves with the areas that could affect them which may require some planning to maximize the benefits.

Some of the things that will affect most homeowners are the following:

  • Reduces the limit on deductible mortgage debt to $750,000 for loans made after 12/14/17. Existing loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap.

 

  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the existing mortgage being refinanced.
  • Repeals the deduction for interest on home equity debt through 12/31/25 unless the proceeds are used to substantially improve the residence.
  • The standard deduction is now $12,000 for single individuals and $24,000 for joint returns. It is estimated that over 90% of taxpayers will elect to take the standard deduction.
  • Property taxes and other state and local taxes are limited to $10,000 as itemized deductions.
  • Moving expenses are repealed except for members of the Armed Forces.
  • Casualty losses are only allowed provided the loss is attributable to a presidentially-declared disaster.

The capital gains exclusion applying to principal residences remains unchanged. Single taxpayers are entitled to $250,000 and married taxpayers filing jointly up to $500,000 of capital gain for homes that they owned and occupied as principal residences for two out of the previous five years.

 

Not addressed in the new tax law, the Mortgage Forgiveness Relief Act of 2007 expired on 12/31/16. This temporary law limited exclusion of income for discharged home mortgage debt for principal homeowners who went through foreclosure, short sale or other mortgage forgiveness. Debt forgiven is considered income and even though the taxpayer may not be obligated for the debt, they would have to recognize the forgiven debt as income.

These changes could affect a taxpayers’ position and should be discussed with their tax adviser.

If you need a good tax adviser, Contact me today ([email protected] OR 480-355-8645).  I know some both in Chandler and the Phoenix Metropolitan area.

About the Author
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Gina is an Associate Broker with Realty ONE Group and the Team Leader for The Gina McKinley Group. She is dedicated to selling homes in Arizona and passionate about providing the ultimate customer service experience through her expertise in the field. Gina received her real estate license in 1998 and has worked hard to service her clients by obtaining the designations and special education of Certified Luxury Home Marketing Specialist, Certified Distressed Property Expert, Certified Residential Specialist, Accredited Buyers Representative, Certified Investor Agent Specialist, Short Sale & Foreclosure Resource Specialist, and Senior Real Estate Specialist. She has been recognized by RE/MAX International with the prestigious Life Time Achievement Award and has also been named "Top 1%" in the State of Arizona by Real Trends. Gina's real estate marketing and business knowledge, experience, and contacts ensure that you will receive a world class customer experience when you work with the Gina McKinley Group to help you sell your home, buy your new home, or sell or purchase an investment property.

Gina's personal time is spent with her family, especially her daughter and business partner, Kristin. She is passionate about giving back to the community, donating a portion of each sale to local charities. Her hobbies include travel, fitness, gardening, and outdoor activities such as hiking, and golf.