The New Tax Law and How in Affects Home Ownership
Effective January 1, 2018, the new tax law impacts important benefits of homeownership:
Mortgage interest deductions
The new law, which applies to mortgage debt incurred on or after December 15th, 2017, allows interest to be deducted on mortgages worth up to $750,000 – for primary residences only. The new law does not affect the $1 million interest deduction limit for homeowners who got that mortgage before December 15, 2017. After this year, interest paid on loans for vacations homes is no longer deductible.
Home equity loan interest deductions
The new tax law no longer allows homeowners with home equity loans or lines of credit to deduct the loan’s interest from a federal return. This deduction was previously allowed up to $100,000, and there’s no grandfather clause.
Mortgage insurance premiums
The new tax law does not reinstate the deduction for mortgage insurance premiums.
Property tax deductions
The new law puts a $10,000 cap on the amount of state, local taxes, and property taxes, that can be deducted from a federal return. Previously, the deduction was unlimited.
We recommend you consult a tax professional about your situation and the tax savings benefits of homeownership.