Last month (January 2018
) we highlighted a few of the recent tax law changes. Here are two additional changes to know about:
1. Mortgage and home equity loan interest deduction.
The new tax law keeps the deduction for mortgage interest, but there are modifications starting this year. For mortgages taken out after December 14, 2017, only the interest on the first $750,000 of mortgage debt is deductible.
This is a lower threshold than in the past. If you have an existing mortgage, you won’t lose any of your interest deduction, but the new threshold will impact new borrowers.
In the past, homeowners who had home equity loans of less than $100,000 could deduct the loan’s interest from their taxes.
Under the new tax bill, home equity loans will no longer be deductible, and there is no “grandfathering” with this change.
2. State and local tax deduction.
When you qualify, itemized deductions allow you to reduce your taxable income. Under the new tax laws, the deduction for all state and local taxes combined cannot exceed $10,000 or $5,000 if you are married and filing separately. Much of the implications for this change depend on a number of specific factors.
Ask us for guidance based on your specific circumstances. Call us at (513) 576-1989.
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