Homeownership Tax Changes
Tax season is here--and almost over. If you haven't filed yet, what are you waiting for? There are plenty of free and low-cost options out there like, Credit Karma and more.
The Tax Reform changed many things like doubled the standard deductions, increased credit amounts and whether and how homeowners deduct mortgage interest and property tax on their tax returns.
Here are three elements of the tax law that could affect homeownership and moving this year.
1: Mortgage interest deduction covers debt up to $750k
Many used the mortgage interest tax deduction to make homeownership even more affordable. It cuts the federal income tax that qualifying homeowners pay by reducing their taxable income by the amount of mortgage interest they pay. With the reform, the deduction was scaled back to interest on debt up to $750,000, instead of $1 million.
2. Property tax deduction is capped at $10,000
Previously, homeowners were able to ease the pain of paying property taxes by reducing their taxable income by the total amount of property taxes they paid. Beginning in 2018, the Tax Reform limited the deduction to a total of $10,000 for the cost of property taxes, and state and local income taxes or sales taxes.
3. Moving Expenses
Under old tax rules, taxpayers could deduct some expenses when you moved for a new job. You had to meet certain criteria involving the distance and timing to be eligible. Beginning in 2018, only active-duty members of the armed forces are allowed to deduct moving expenses.
The Tax Reform changed many of the well-known tax laws that we've lived by for years--especially charitable deduction. If you decide to itemize, don't forget to add how much you've donated to local charities like Habitat! When you donate online, we automatically send you a receipt for your taxes. We make it easy for you to claim this deduction at tax time.