The New Year is bringing changes in tax laws...and knowing them certainly helps prepare you for the year ahead. While in some cases, that may mean you cannot change your present situation...it may mean how you make changes in how you plan for the year ahead.
Mortgage interest deduction reduced to $750,000 of mortgage debt
ThIs interest deduction has been reduced to mortgage debts up to $750,000 total; it was formerly a milliojn for 1st and 2nd residences that qualitied. Only homes purchased after January 1, 2018 for over $750,000 will be impacted.
Higher Standard Deduction
The standard deduction for people filing singly almost doubled from $6,350 to $12,000 as well as for couples filing jointly, deduction went from $12,700 to $24,000. A standard deduction may take the place of itemizing dedutions for some taxpayers.
Home equity interest is no longer deductible
Home equity loans have become the "American Piggy Bank" and used for vacations, college funds, etc Now theinterest paid can only be used in the purchase, building or significant improvements on a home....this little piggy is no longer available for everything else.
Homeowners can still deduct mortgage interest paid on a home renovation loan, which could result in a significant tax break. This is true when mortgage interest exceeds the standard deduction
The BEST advice....
Is to consult your tax professional to learn how these changes impact your individual situation.
This has been a practical advice post brought to you by Sally K.& David L. Hanson, Broker Associates with EXP Realty,honored to be of service for all things real estate in southeastern Wisconsin.