7 Write-offs for Homeowners Set to Change in 2018

2017-2018 Standard Deduction Change 2017 Standard Deduction (Current tax year) Single - $6,350 Married filing jointly - $12,700 Head of household - $9,350 2018 Standard Deduction (Next tax year) Single - $12,000 Married filing jointly - $24,000 Head of household - $18,000

President Donald Trump’s “Tax Cuts and Jobs Act” was officially signed into law on December 22, 2017 with 4 goals in mind:

1. tax relief for middle class

2. simplify the tax code

3. grow the American economy

4. avoid adding to national debt

While that all sounds fine and dandy, many Americans are still confused and afraid of the new tax laws, when they will take place, and most of all, how it will affect them. One of the main changes tax filers are worried about are deductions, especially for homeowners as they had the ability to itemize many home-related expenses. The new tax law will cause changes to both standard and itemized deductions that will determine how you file your taxes in the near future.

First, it is important to know the increase of the standard deduction amounts on individual (1040) tax returns:

One of the perks of homeownership is the ability to write-off or deduct the many expenses of owning a home. The standard deduction amounts listed above are a set dollar amounts the IRS allows you to deduct from your taxable income based on your filing status and age. Tax payers have the options to either a) take the standard deduction amount or b) itemize deductions (use Schedule A) such as charitable gifts, interest/taxes paid, medical expenses, etc.). It is important to know which deduction will benefit you most–especially as a homeowner!

So, should you standardize or itemize?

To start, use the chart below as a guide to understanding the current tax year’s (2017) and the changes to next tax year’s (2018) itemized deductions for home owners for the best savings potential:

‼️REMINDER: The changes to tax laws as a result of the “Tax Cuts and Jobs Act” will not take place until tax year 2018‼️

For the current tax year 2017, follow column 1 below

2017-2018 Homeowner Deductions Explained Itemized Deduction Current Tax Year (2017) Next Tax Year (2018) Mortgage Interest (combined total for 1st and 2nd homes and investment properties) Deduct up to $1 million in mortgage interest Deduct up to $750,000 in mortgage interest *Note: For new mortgages starting before Dec. 15th, 2017, you may deduct up to $1 million in mortgage interest Property Taxes Tax deductible on any residence and/or piece of land you own *Note: If 2018 property taxes were assessed and prepaid in 2017, taxpayers may deduct amount on 2017 federal income tax returns. Tax deductible up to a certain amount (combined with state/local income tax): Single/Head of household/Married Filing Jointly: $10,000 Married Filing Separate: $5,000 Private Mortgage Insurance (PMI) Deduction had expired in 2016, but retroactively made the deduction available under certain income requirements. Tax deductible under certain income requirements. Energy-Efficient Upgrades 2 credits are still available through Dec. 31, 2021: 1. solar electric 2. solar water heating If installed between Jan. 1 2017 and Dec. 31, 2019, the same 2 credits can be deducted up to 30%. Home Office Maximum deduction of $1,500 under strict requirements. Deduction is only available for self-employed. Employees occasionally working from home may not deduct. Medically-necessary Home Improvements Expense must exceed 7.5% of adjusted gross income. *Note: Must have a note from doctor proving changes made were medically necessary. Expense must exceed 7.5% of adjusted gross income. *Note: Must have a note from doctor proving changes made were medically necessary. Interest of Home Equity Line of Credit (HELOC) Interest paid on the loan for a HELOC taken out in 2017 is tax deductible. Not tax deductible unless using HELOC for buying, building, or improving property.

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Anthony Cummuta

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