1. Mortgage Interest Deduction
There was concern that the mortgage interest deduction (MID) would be eliminated.
That didn’t happen.
However, the bill has made the following changes:
Reduces limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17 (from the existing $1,000,000). Current loans up to $1 million are grandfathered.
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 refinanced.
Repeals deduction for interest paid on home equity debt through 12/31/25.
Interest is still deductible on home equity loans if proceeds are used to substantially improve the residence.
Interest remains deductible on second homes, but subject to the limits.
2. State and Local Taxes (SALT)
There was concern that the state and local tax deduction (which includes property taxes) would be eliminated.
That didn’t happen.
The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes.
3. Exclusion of gain on sale of a principal residence
There was concern that owners would now need to live in their house for at least 5 out of the last 8 years to claim this exemption. Under the former tax framework, a typical owner, who has lived in their house for at least 2 years out of the last 5 years, would pay nothing in capital gain taxes if they sell the house.
No change.
The new code will remain the same as the old.
Other links that might help:
TAX CUTS AND JOBS ACT
The final proposal put up for vote by the Conference Committee.
H.R. 1 – The Tax Cuts and Jobs Act
The National Association of Realtors’ (NAR) Issue Brief. More information on other aspects of the bill.
This information is brought to you by Keeping Current Matters with disclaimers-see below.
The Militello Team sells real estate North of Boston in Essex County on the North Shore with over 40+ years of experience. We know some excellent tax accountants who can help you with your tax matters, call us today we are happy to give you their information.
THE MILITELLO TEAM
(978) 815-3877 - Joseph
(978) 500-1480 - Kathleen
Source: Keeping Current Matters
Disclaimer #1: This page is not meant to be a resource for tax advice but instead a resource for basic information concerning the aspects of the new tax code and how it may impact the real estate market. Our views herein provide broad guidance to the industry. The specific impact on each individual and property will vary. Therefore, your clients and customers should get tax advice from their accountants or financial advisors who will explain how the entire tax code will affect their personal returns.
Disclaimer #2: We wanted to get this information to you as soon as there was a final bill presented to the President to sign into law. Some of the commentary on this page may be revised as the analysis of the bill and future law evolves. As further clarification of the new code and deeper analysis becomes available, we will update this page.
Update #1: It seems that the President may wait until the New Year to sign this bill into law. As such, there may yet be negotiations that take place which could impact the bill itself or the bill’s impact on housing. We will be keeping a close eye on official changes and will update this page if necessary.