Real Estate Mortgage Interest Tax Laws: How will they affect you in 2019
It is that time of year again, tax time. New rules will go into effect for homeowners and their 2019 tax returns. Don’t fret just yet it doesn’t mean your taxes are going up just yet.
The big change is the standard deduction. The amount everyone gets no matter if they have deductions or not nearly double under the new law. Now it’s $24,000 for married, joint-filing couples, this is up from $13,000. For head of household it is $18,000 up from $9550 and filing single is $12,000 up from $6,500.
More people will get a better deal now by taking the standard deduction rather than itemizing. Under the new rules people who will be able to deduct their mortgage interest will go from around 32 million to about 14 million, that’s about a 56% drop.
Which one will you be eligible for? To see how your numbers shake out check out the standard vs itemized calculator.
If you will take the standard deduction you will be happy to know that tax forms are easier when you don’t itemize.
Personal exemptions have been repealed and will probably affect your tax status as well. An example would be the following: A family of four with two kids over 16 in the 22% tax bracket will no longer have personal exemptions totaling $16,600. Although the increase in the standard deduction is worth $2,420 the loss of the exemptions would cost them an extra $3,652, so they would lose $1,232.
There are also new cap laws for real estate mortgage interest you can write off, if you have a loan over $750,000 you will no longer be able to write off interest paid on debt over the $750,000 cap.
State and local tax deductions change also, you will not be able to deduct more than $10,000 for all your state and local taxes combined no matter if you file single ore married, it’s $5,000 per person.
If you have a home equity loan you will be able to write off the interest on your home equity or second mortgage if you itemize, but only if you use the proceeds to substantially better your home and only if the total combined with your first mortgage doesn’t go over the $750,000 cap. The interest is not deductible if you used the loan for any other reason than to make your home better.
A few tips to help you navigate the new real estate tax laws, if you are single it would be benefit to you if you bought a home, if you’re a student your loan debt is still deductible, charitable deductions and some medical expenses can still be itemizable and if you have a real estate mortgage over $750,000 pay it down faster so you don’t eat the interest.
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Information in this article is deemed reliable. All information is provided “as is” with no guarantee of accuracy and with out warranty of any kind.