The new tax law known as the Tax Cuts and Jobs Act will impact some taxpayers who itemized deductions relating to home ownership.
First, you may have heard that there is a change to mortgage interest deduction allowed for 2018 returns. If you have a pre-existing mortgage (acquired before December 15, 2017), then you can still deduct mortgage interest on a mortgage associated with acquisition indebtedness of up to $1 million. If you entered into a mortgage after the December 15, 2017 date, you can only deduct mortgage interest on up to $750,000 of home acquisition indebtedness.
It is also worth noting changes to deductibility of home equity loan interest for 2018. Prior to the TCJA, homeowners could deduct home equity interest regardless of what the funds were used for. TCJA changed that and now only home equity interest on funds used to acquire, build or substantially improve your home is deductible
Lastly, taxpayers who have been able to deduct private mortgage insurance premiums in the past, may not be able to do so in 2018. The provision for that deduction expired at the end of 2017, and has not yet been extended. However, there may still be hope, as the 2017 provision was not extended until AFTER the start of 2017 tax filings in February 2018.
Honorine M. Campisi, CPA