6 Things Houston Home Buyers and Homeowners Should Know About Tax Reform
Tax reform could affect both Houston home buyers and homeowners beginning in 2018. Here are highlights about the impact of tax reform to residential real estate, as taken from Kiplinger magazine and CNN Money. Please note, this is not tax advice; consult a professional tax preparer to see how the new law affects your personal situation.
1. Job-related moving expenses are no longer an allowable deduction as of 2018, except for members of the military.
2. The interest paid on home equity loans will no longer be deductible as of 2018, unless the proceeds are used to significantly upgrade or repair the home.
3. The interest deduction for your primary mortgage remains intact, for both primary residences and vacation homes. However, a limit of $750,000 applies to mortgages originated after December 15, 2017. Mortgages that existed prior to this date can claim up to $1 million in interest deductions.
4. The deductions for state and local income taxes paid, as well as for real estate property taxes paid, have been capped with a dollar amount limit. Beginning in 2018, the combined total of these deductions cannot exceed $10,000.
5. Starting in 2018, unreimbursed casualty losses will no longer be deductible, unless they occurred in a presidentially-declared disaster area. (It should be noted that the casualty deduction for the 2017 tax year remains intact, which may help some Houston homeowners who experienced flood damages.)
6. The capital gains tax exclusion on the sale of a primary residence remains unchanged. If you owned a home for at least 5 years, and had it as your primary residence for at least 2 of those 5 years, profit on the sale, up to $250,000 for single filers and $500,000 for married filing jointly, is excluded from capital gains taxes.
While the tax benefits of home ownership may be slightly less lucrative under the new law, the increase in the standard deduction could make certain itemized deductions a moot point – and perhaps a non-issue – for some Houston home buyers and homeowners. Everyone’s tax situation is different; please see your professional tax preparer for more information, and watch IRS.gov for 2018 guidelines as they become available.
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