As part of the new proposed tax plan, there are items of special interest to homeowners, And the same items are of interest to people planning to purchase their first home. Let’s get a few minor items out of the way.
The existing 401K plans will not be affected by the new tax plan. As you have probably heard, the standard deduction of $6000 per person or $12,000 for a married couple will be doubled. This will make the standard deduction for a single person $12,000. The deduction for a married couple will rise to $24,000. This means that the first either $12,000 or $24,000 will not be taxed. Many other deductions will no longer be allowed, such as medical and charitable, among others. Also, the tax deduction for local and state taxes (this means your real estate taxes) will no longer be allowed.
So what does this mean to you? It may help you, or it may hurt you.
Now, first let me get something out of the way. I am not a tax professional. Anything I say about taxes is to the best of my understanding. Before you act upon anything I may say here, please check with your financial advisor or your accountant. Or anyone who may know more about this than me.
So, the way I see it, if your deductions for real estate taxes and medical and charity and all of the other deductions we can no longer take are less than or equal to $6000 for a single or $12,000 for a married couple, this will not hurt you. If you are paying more than $12,000 in real estate taxes, I have some bad news for you.
The rest of this also comes into play, and gets added to what I said above.
Currently we can deduct real estate taxes, the other small deductions and mortgage interest that you have paid. Here is the change, as I read it. Under the new tax plan you can still deduct your mortgage interest that you have paid, but the deduction is capped at $500,000. That’s right, $500,000.
This means that those people living in their McMansions will no longer be allowed to deduct all of the interest if their mortgage interest exceeds $500,000.
This has no bearing on my life, nor on my children’s lives. So I am not getting too excited over this.
So if you have questions about the new tax plan, don’t call me. Find someone else to call. But if you have real estate questions, please call me, Art Reiman, at 732-598-7700. Or visit me online at www.BunnyandArt.com www.55PlusInOcean.com or www.55PlusinMonmouth.com .