New Tax Laws of 2018

New Tax Laws of 2018

On Friday, December 22, 2017, President Trump signed the Tax Cuts and Jobs Act, designed to lower taxes and spur economic growth.  Most of these changes have already taken effect, starting on January 1, 2018.  Expecting to reduce taxes for individuals and businesses, this new tax reform bill will increase standard deduction, increase child credit tax among several other adjustments.

Mortgage Interest Deduction

The limit for mortgage interest deduction dropped from $1 million in housing debt to $750,000.  This is effective on homes purchased after 12/15/17.  Also allows the $1 million limit for refinancing an existing loan as long as the new loan is not greater than amount refinanced.

Standard Deduction

Increasing (nearly doubling) to $12,000 for individuals and $24,000 for couples filing jointly.  This increase means fewer people will have to itemize and more taxpayers will be able to take the standard deduction.  The standard deduction for taxpayers with few itemized deductions will exempt twice as much of their income from federal taxation.

State and Local Tax Deductions

New $10,000 deduction limit on state and local taxes, including income and property taxes.  Taxpayers can claim the aggregate of state and local property taxes capped at $10,000.  Interest can be deducted at $750,000 down from $1 million on the amount of mortgage obligation on new home purchases.

Home Equity Deduction

HELOC (Home Equity Line of Credit) was tax deductible when debt was incurred “for reasons other than to buy, build, or substantially improve your home.” This tax deduction has been removed.

Moving Expense Deduction

Certain moving expenses were tax deductible if starting a new job.  This is now limited to only active duty in the armed forces.

Increased Child Tax Credit

The Child Tax Credit is doubled from $1,000 per child to $2,000 with an amount that is refundable to $1400. Also, adding a nonrefundable credit of $500 for dependents other than children.  Income threshold raised from $110,000 for a married couple to $400,000.

*Please consult a tax advisor

 

Want to learn more? Contact a First Home Loan Officer, today!

Related Posts

What is LTV and Why is It Important? Featured
What is LTV and Why is It Important?

When researching the home buying and lending process, odds are you’ve encountered the acronym LTV at some point. But what does LTV mean and why does it matter? Read on to find out! What is LTV? LTV stands for loan-to-value ratio. Expressed as a percentage, LTV is the difference between the mortgage amount and the […]

April 14, 2021
Full Post
Managing Your Finances Before Buying a Home
Managing Your Finances Before Buying a Home

Buying a home is one of the biggest investments you’ll make in your lifetime, if not the biggest. There are things you can do to better prepare financially. Save for a Down Payment While there are loan options available that allow for little to no down payment, you may find that putting down the standard […]

March 17, 2021
Full Post
Government Home Loan Basics
Government Home Loan Basics

The United States government offers programs through various agencies which are designed to better serve borrowers who are in unique circumstances. Read on for more information about the most common government home loans available. FHA Loans The Federal Housing Administration, or FHA, insures FHA loans. FHA programs are available for borrowers with limited savings for […]

February 03, 2021
Full Post

Connect With Us