The Tax Cuts and Jobs Act (“TCJA”) signed into law by President Trump, was the largest overhaul of the U.S. Tax Code since 1986. These changes impacted almost all aspects of American life including home ownership. Over the next few posts we will detail what has stayed the same and what has changed.
Deduction for State and Local Taxes
In one of the more controversial provisions of the TCJA, an itemized deduction of up to $10,000 is allowed for payment of state and local property, income and sales tax. The limit applies to both married and single filers. Initially, the bills in both the House and Senate removed this deduction altogether; however, it was re-inserted with caps on the deduction in the final bill.
This provision has potential substantial impact on homeowners in areas with high property taxes.
Standard Deduction/Personal Exemptions
The standard deduction has been increased to $24,000 for those married and filing jointly and $12,000 for single filers. This was done in large part to simplify the tax returns. It also eliminates in many cases the need for itemized deductions except for those persons who can itemize over $12,000/$24,000 respectively.
With this increase, the personal exemptions have been repealed.
Mortgage Credit Certificates
The tax credit remains.
Contact Painter & Associates to help you navigate the TCJA.