by Leslie Kopp
on Saturday, December 30th, 2017 at 11:12am.
There is no question that the pending tax reform bill has weighed heavily on the minds of buyers and sellers over the previous few weeks and although the final tax reform bill is certainly not perfect, we are pleased that it is significantly better for homeowners than previous versions.
Mortgage interest deductions have been reduced to a combined $750,000 of loan debt for primary residences and second/vacation homes. New homebuyers can deduct interest on up to $750,000 of combined mortgage debt. Current homeowners are grandfathered into the previous deduction to a combined debt limit up to $1 million. Proposals to eliminate the mortgage interest deduction on second and vacation homes were not passed with the new laws.
Interest deductions for home equity loan debt has been eliminated if you're not using the money for home improvements. Previously, homeowners could deduct interest on home equity debt up to $100,000—even if those loans were taken to fund purchases outside of their homes, like a child's college tuition. Now, you can only take an interest deduction for up to $100,000 of home equity debt if the loan is spent on your home.
Deductions for property taxes, as well as state income or sales tax, are now capped at a combined $10,000. Previously, homeowners could deduct the full amount for their local property taxes, as well as the full amount of either their state income or sales taxes. In 2018, you'll be limited to a combined deduction total of $10,000 for state and local property, income and sales taxes.
Capital gains tax exclusions remain the same when you sell your house. Previous versions of the tax bill proposed cuts to the exclusion, but married filers can still exclude up to $500,000 when selling their primary home, as long as they've lived there two of the past five years.
Moving expenses are no longer deductible. Currently, you could deduct reasonable moving expenses if you met certain requirements, but that deduction has been eliminated.
If home ownership at the beach is in your future, please take some time to search homes for sale at the Delaware Beaches on our website and give us a call if you would like to schedule some time to look at homes: 302-541-5207.