Tax season is officially underway, and many are tracking down their receipts and filling in forms in preparation for the tax deadline in April 2017.
Many also have questions about the newly enacted tax policy – The Tax Cuts and Jobs Act, which was signed into law by President Trump in December 2017.
The new tax law, which went into effect on Jan. 1, 2018, does not apply to this year’s tax return, which has to be filed in April. Most of the changes will not be noticeable until consumers file their taxes in 2019.
What is in The Tax Cuts and Jobs Act? There are notable changes in the new tax law that affect nearly everyone, and there are changes of particular interest to current and future homeowners including the mortgage deduction.
Under the new law, new homebuyers are able to deduct interest on the first $750,000, formerly $1 million, of mortgage debt on a newly-purchased home. Current homeowners who had a mortgage in place by Dec. 14, 2017, will not be affected by this change.
Homeowners must itemize their taxes if they want to claim the mortgage interest deduction. With the higher standard deduction under the new law, fewer Americans are expected to itemize next year.
Taxpayers are no longer able to fully deduct state and local property taxes plus income or sales taxes. The new law allows individuals to deduct up to $10,000 in property taxes and state and local income or sales taxes.
Taxpayers may exclude up to $500,000 ($250,000 for single filers) from capital gains when they sell their primary home, as long as they have lived there for two of the past five years.
“My advice to everyone is to consult with a tax professional,” said Berkshire Hathaway HomeServices Florida Network Realty Founder, President and CEO Linda Sherrer. “There are numerous factors that can determine what your tax bill will be, and a tax expert can help you understand what the changes in the new law mean for you.”
According to the National Association of Realtors, the legislation will benefit many homeowners, homebuyers and real estate investors.
“Keep in mind that every tax situation is different and we encourage everyone who is buying or selling a home to consult with a tax professional about the variables that could affect you,” said Broker/Executive Vice President Christy Budnick. “There are many factors in a homeownership decision, and the tax implications are just one of them, not the whole picture when making a home-buying or selling decision.”
Founded in 1988, Berkshire Hathaway HomeServices Florida Network Realty has a team of more than 400 real estate professionals in nine offices throughout Northeast Florida. For more information, call (904) 296-1906 or visit FloridaNetworkRealty.com.
Photography:
- Berkshire Hathaway HomeServices Florida Network Realty Founder, President and CEO Linda H. Sherrer
- Berkshire Hathaway HomeServices Florida Network Realty Broker/Executive Vice President Christy Budnick
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