The new Tax Cuts and Jobs Act affects homeowners in several ways, depending on several factors, including location, your income and the value of your home. Some people will see the tax benefits of homeownership and real estate investment while others will lose those benefits. Increasing interest rates and lower home values also depend on location and the value of the home. Most of the impact won’t be felt until 2018, though some taxpayers will see changes when they file their 2017 taxes if they bought a home after Dec. 15, 2017.<\/p>\n
The new law allows mortgage interest deduction for homes up to $750,000. The old amount was $1 million. If you purchased a home after Dec. 15, 2017 and the mortgage is higher than $750,000, you will only be able to deduct $750,000. You will still be able to deduct the interest on a second home, but that is also capped at $750,000. Thus, those who own homes with mortgages higher than the cap will end up paying more taxes on home ownership.<\/p>\n
If your mortgage was filed on Dec. 14, 2017, or earlier, your mortgage is grandfathered in and you will still be able to deduct up to the old cap of $1 million, even if you refinance to get get a better rate after Dec. 15, 2017. Additionally, the deduction for home equity debt has been eradicated. If legislation is not enacted in 2026 to keep this in place, the caps will revert back to the old caps and will add home equity back into the allowable deductions.<\/p>\n
The standard deduction doubled under the Tax Cuts and Jobs Act. Single taxpayers get a standard $12,000 deduction and those who file jointly get $24,000. This means that it’s more beneficial for taxpayers to take the standard deduction instead of itemizing. Thus, the deduction for home ownership no longer applies since that deduction for most is lower than the standard deduction. Additionally, deductions on state and local property taxes are limited to $10,000.<\/p>\n
Because the standard deduction is higher and saves taxpayers more than if some itemized, this reduces the tax benefits of owning a home unless deductions related to the home are higher than the standard deduction. Previously, 44 percent of the homes were worth enough so that owners had to itemize. Under the new law, that number has changed to 14 percent.<\/p>\n
This means that while you are technically not claiming your home to get the deduction, you are still getting it \u2013 it’s just lumped into the standard deduction. Always check your deductions every year to\u00a0ensure<\/span>\u00a0which method is better \u2013 itemizing or not.<\/p>\n Because the value of your home and property taxes vary widely from county to county \u2013 and even from city to city \u2013 some areas may see decreases in the price of homes because of the changes. This will most likely affect only the more affluent neighborhoods where homes are over $750,000. However, homes in areas with high-ranked school districts may see some changes in price because more people may opt to continue renting since the tax incentive for buying a home may not be a factor.<\/p>\n Places like parts of New Jersey and downstate New York are most likely to be affected, whereas places in some of the less affluent states may even see an increase in home prices, especially if there is job growth in those areas. Other high tax areas including California, Connecticut and Maryland may also see a decline in home prices since the $10,000 property tax cap doesn’t begin to cover the tax bill for homes in those states.<\/p>\n","protected":false},"excerpt":{"rendered":" The new Tax Cuts and Jobs Act affects homeowners in several ways, depending on several factors, including location, your income and the value of your home. Some people will see the tax benefits of homeownership and real estate investment while others will lose those benefits. Increasing interest rates and lower home values also depend on […]<\/p>\n","protected":false},"author":3,"featured_media":405,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34,30],"tags":[],"coauthors":[26],"class_list":["post-404","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-home-buyer"],"yoast_head":"\nWhere Real Estate is Most Impacted<\/h1>\n