I am sure that most have heard about the new tax bill. Here is an overview of how it affects homeowners:
1. Starting 2018, the interest paid on loans for vacation homes is no longer deductible. Consult your tax advisor CPA and talk to us about restructuring your mortgage debt to investment properties first, then primary residence and last on vacation homes.
2. Property, state and local income taxes face a combined $10,000 deduction limit.
3. While the deduction limit pertaining to mortgage interest drops to $750,000 of debt on your primary residence, it remains $1 million for homes purchased before Dec. 15 of this year. You may want to restructure your mortgage debt on your primary residence and/or shortening the term if you are not getting a benefit from itemized deductions after the increase in the standard deduction.
4. Taxpayers will continue to be able to exclude up to $500,000 ($250,000 for single filers) from capital gains taxation when they sell their home, if they have lived there for two of the previous five years. Make sure you meet the two of previous five years requirement when considering the sale of the residence or consider the benefit of keeping the property as an investment property.