With the New Year just around the corner we thought it might be helpful to give you a shortened version of the changes to income tax deductions related to homeowners for the coming 2018 year. As always, you should consult your tax adviser before making any decision, but time in running out to pre-plan for 2018 and keep in mind that Montgomery County, DC and Fairfax County are accepting early payments!
As always, we are here to help with any and all of your real estate needs – buying, selling, renting or investing in Maryland, DC and Northern Virginia, we’re only a phone call away.
Downsized mortgage interest deduction
- New homebuyers would now only be able to deduct interest on the first $750,000 of mortgage debt on a newly-purchased home.
- That’s down from the current $1 million threshold, but higher than the $500,000 limit the House proposed in its tax overhaul in November.
- Current homeowners would not be affected by the lower cap.
Tax break stays for home sellers
- Both the House and Senate bills originally wanted to scale back a tax break for homeowners when they sell their home for a gain.
- Taxpayers will still be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains when they sell their primary home, as long as they’ve lived there for two of the past five years.
Limit on property tax deduction
- Taxpayers will no longer be able to fully deduct state and local property taxes plus income or sales taxes.
- Instead, the legislation allows individuals to deduct up to $10,000 in state and local income and property taxes or state and local property and sales taxes.