Jan 2 2018 38376 1

Dated: January 2 2018

Views: 154

                                                                                                                 Mortgage Interest Deduction

The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.

Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.

The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.

Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.

The House-passed bill would have capped the mortgage interest limit at $500,000 and eliminated the deduction for second homes.

Deduction for State and Local Taxes

The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.

The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.

When House and Senate bills were first introduced, the deduction for state and local taxes would have been completely eliminated. The House and Senate passed bills would have allowed property taxes to be deducted up to $10,000. The final bill, while less beneficial than current law, represents a significant improvement over the original proposals.

Latest Blog Posts

Jan 4 2022 38376 2

Economic Update 2022Stock Markets had another stellar year in 2021- While the world did not return to normal from the full effects of the pandemic it did came a long way from the complete shutdown

Read More

Jan 4 2022 38376 1

Experts Predict What the Housing Market Will Look Like In 2022The pandemic ignited a home-buying frenzy as the decade-long housing shortage converged with historically-low mortgage rates,

Read More

Nov 2 2021 38376 3

Economic update for the month ending October 31, 2021 Stock markets surged to record highs in October- Stocks rebounded in

Read More

Nov 2 2021 38376 1

Is The Housing Market In A Bubble?               3 Reasons Why the Answer Is NoThe rapid rise in demand for housing and the

Read More