The deadline to file taxes is less than a month away, and for some homeowners the new tax code has changed what to expect. As with all financial matters, it’s recommended that you consult a certified professional.
The new tax code doesn’t automatically mean your taxes are going up, but there are some significant changes of which homeowners should be aware. The biggest? Some of the homeowners who used to write off property taxes and the interest they pay their mortgage will no longer be able to.
The new law caps the loan amount for which you can write off the mortgage interest at $750,000. However, if your loan was in place by Dec. 14, 2017, it’s grandfathered in and the old $1 million maximum amount still applies.
Since most people don’t have a mortgage larger than $750,000, they won’t be affected by the cap.
If your mortgage exceeds the $750,000 cap, pay it down faster. Homeowners can add a little to the principal each month or make a 13th payment each year.
Another highlight of the new tax code is the added benefits for single people who buy a house. Evan Liddiard, a CPA and the director of federal tax policy for the National Association of Realtors, says, “Single people can often reach [and potentially exceed] the standard deduction more quickly.”
Student loan debt is deductible as well. As much as $2,500 is now deductible if you’re repaying, whether you itemize or not.
Charitable deductions and some medical expenses remain itemizable. If you’re generous or have had a big year for medical bills, these, along with your mortgage interest, might be enough to bump you over the standard deduction hump and into the write-off zone.
Again, each person’s circumstances are different, so be sure to consult a tax professional to help navigate this new tax territory.
Greater Chattanooga Realtors is “The Voice of Real Estate in Greater Chattanooga.” A regional organization with more than 2,000 members, Greater Chattanooga Realtors is one of some 1,300 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. Greater Chattanooga Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. More information at www.gcar.net or 423 698-8001.