Tax Bill Changes – do you understand them?
Many of us have read about the changes in the tax bill that are coming. These changes will take effect for the 2018 tax year. And, if you’ve been reading what I have, you probably don’t understand most of what you read. In fact, I think they do this on purpose so that we don’t know what they did.
But I found something that explains what the new tax bill is all about. And it uses language I can understand. So let me tell you about it.
However, I need to tell you something. I am not a CPA, neither am I a financial expert. Nor do I play one on TV.
However, I am a Realtor. You can visit my web site www.55plusinOcean.com or call me at 732-598-7700
Okay – here we go.
First, there is a change to the mortgage deduction cap. Previously you were allowed to deduct the mortgage interest on a loan value up to $1,000,000. If your mortgage was for greater than that amount, you were limited to deducting the interest only on the first $1,000,000. That limit has been reduced to $750,000. I don’t think this provision will affect many of the readers of this blog.
Another limit has been placed on the amount of property taxes you are allowed to deduct. The maximum is now $10,000 for a couple, $5000 for a single person, where it was unlimited. In English, you can’t deduct more than $10,000 in property taxes, even if you paid more than $10,000. This will affect some people who are, or will be living in adult communities.
Prior to 2018, you were allowed to deduct interest paid on a home equity loan, if the funds were used to buy build or make improvements to your home. Beginning in 2018, interest on a home equity loan is no longer deductable.
However, the standard deduction has been increased from $6000 to $12,000 for a single person, and from $12,000 for a couple to $24,000.
Other deductions that many claimed who itemized deductions are no longer allowed. But for many of us the new tax plan will allow us to keep more of our earnings.
But with the high taxes and home prices that we have in New Jersey, we will probably not keep as much as people in other states.
Remember – please talk with your financial adviser and / or your tax adviser. I hope that they are more qualified than I am to give you advice on this subject. But they probably cannot help you to buy or sell a home. Call me for that.