While the late 2017 Congressional tax overhaul makes filing simpler for many Americans, it also limits some deductions related to home ownership. Here’s what you need to know.
1.The cap on home loan interest rate deduction
Under the new tax law, homeowners can only deduct mortgage interest paid on up to $750,000 of a first or second home. Before, the limit was $1 million.
2. New $10,000 cap on property tax deduction
In the past, homeowners were able to deduct all state and local taxes paid on all properties they own. With the new law, homeowners will only able to deducts $10,000 per year. For those in high-tax areas, this hits particularly hard.
3. Increased Standard Deduction
Homeowners who itemize their deductions will be pleased to know the standard deduction limit has nearly doubled. The new limits are $12,000 for single filers, $18,000 for heads of household, and $24,000 for married couples. This means that those who itemized in the past can now save more by taking the standard deduction.