| 815-235-2111 | 815-616-5311 ask@choicerealtyfreeport.com

What the Proposed Tax Reform Plan Means for Homeowners

Both the House and Senate are currently working on a “Tax Cuts and Job Acts” tax reform plan. The House and the Senate each have a version they are trying to enact and there are many similarities, but also some important differences in these proposals. If you are a homeowner, you should be aware of what is being proposed in these plans. Let’s start with the Senate’s version of tax reform as it relates to homeowners. The proposed legislation retains the current mortgage interest deduction level and doubles the standard deduction. It limits the Capital gains Exemption on the sale of a primary residence and would require a homeowner to live in the property 5 out of 8 years to qualify for the exemption. The current rules only require 2 out of 5 years. This would have a significant impact on anyone who would need to move within 5 years of a purchase. This proposal also would eliminate the interest deduction on home equity loans, all state and local taxes (including property taxes) and moving expenses (unless they are related to the military). The current version of the House’s plan has many things in common with the Senate’s plan: the same change in the Capital Gains Exemption from 2 out of 5 years to 5 out of 8 years, increases the standard deduction, eliminates the deduction for state and local taxes but keeps the property tax deduction limited to $10,000 and eliminates the deduction for moving expenses. In addition, this version seeks to cap the mortgage interest deduction at $500,000 for new mortgages, eliminates the mortgage interest deduction entirely...

Pin It on Pinterest