The New Tax Bill and Homeownership

The New Tax Bill and Homeownship

The following gives the highlights of the entire tax bill.  I have bolded/underlined/italicized those that apply to homeowners.

These officially took effect on January 1, 2018 - but you won't realize any of it until you file your taxes at the beginning of 2019.

General for all:

• An overall lowering of the tax bracket rates, including the top tax bracket which falls from 39.6% to 37%
• Personal exemptions are repealed

For taxpayers who itemize deductions:

State and local income and real estate taxes are capped at $10,000 per year

• Home mortgage interest from home equity loans will no longer be deductible
• Home mortgage interest on new mortgages is only deductible to the extent of $750,000 of acquisition indebtedness
• Charitable contributions of cash can be deducted currently up to 60% of adjusted gross income (up from 50%)
• Miscellaneous itemized deductions -- including unreimbursed employee business expenses, tax return preparation and investment management fees -- are no longer deductible

Also:

• Standard deduction for joint taxpayers increases to $24,000
• Child tax credit expanded and will be allowed at higher levels of income (phasing out beginning at $400,000 of income in place of $110,000)
• Up to a 20% deduction for income earned by "pass-though" businesses such as partnerships and S corporations (subject to a bunch of limitations)
• Alternative Minimum Tax (AMT) provisions are retained, but fewer people will be subjected to its reach
• Lifetime exemption from estate and gift taxes double for 2018 - potentially allowing for a great deal of planning to occur for those who haven't adequately protected their estate or who can now take advantage of the higher limits

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