Never Mind the Tax Cuts and Jobs Act, Here's the Homebuyers
- Mortgage Interest Deduction: Reduced from $1MM to $750K.
- Grandfather: If you have a loan that was originated before 12/15/2017, and your mortgage balance exceeds $750K, you are still able to deduct the interest up to $1MM. You're grandfathered in, unless...
- Don't Fear the Refi: If you refinance a mortgage with a balance above $750K and your loan was originated before 12/15/17 AND via the refi the loan balance does not increase, you will "carry over" your $1MM cap.
- HELOC'd and Unloaded: The mortgage interest deduction on home equity lines of credit (HELOCs) is eliminated.
- New and Improved: If your HELOC can be shown to have been used to substantially improve your residence, mortgage interest may still be deductible, up to the limits.
- Take Me Away: Interest remains deductible on vacation homes, but only up to the limits.
- S.A.L.T: There is a $10K limit on state and local taxes that may be listed as itemized deductions.
- God Save the Capital Gains Exemption: OK, he did. No changes to this from previous law. If you sell your primary home (defined as occupied for two of the last five years), the capital gains exemption of either $250K or $500K, depending on single or married, stays in place.
Punk rock burst onto the music scene in the '70's because it was simple, loud and carefree. The new tax law is complex, boring and important to understand if you're thinking of buying or refinancing real estate. Sid Vicious would be happy to hear me tell you I'm not a CPA, but if you want to discuss the implications of getting a mortgage in the new tax environment, give me a call any time, we'll crank it up and rock the home loan Casbah.
California Uber Alles,
Robert J. Spinosa
Vice President of Mortgage Lending
Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709
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