South Florida Real Estate Blog by Michael Catino, Realtor

Changes to Real Estate Tax Deductions for Florida

TCJA Items to Watch in 2018

When the TCJA was pushed through Congress in December 2017, many people were up in arms. The overhaul, they said, was going to be problematic for a number of reasons, which, we’ll see how that pans out. It does seem that when it comes to real estate, the TCJA is going to be a pretty prickly thorn in a lot of property owners’ sides.

These are the top items you’ll want to pay close attention to this year:

Item #1: SALT

The state and local tax deduction (SALT) is set to be a problem for homeowners in high-tax areas. In the past, you could claim an unlimited amount of already-paid personal state and local income taxes, as well as your property taxes, as a deduction to offset your tax bill. From now until 2025, you’ll only be able to use your Schedule A to itemize $5,000 worth of these taxes if you’re married filing separately and $10,000 if you are single or married filing jointly.

This looks like a bear of an issue for many people in those high tax areas on both coasts, but for some, the increase of the standard deduction to $12,000 for singles or $24,000 for couples may balance the equation.

Item #2: Your Mortgage Interest Deduction

If your home was purchased after December 14, 2017, you will be subject to the new limits on mortgage interest deductions. Instead of being able to deduct the interest on up to a $1,000,000 mortgage, you’ll be capped at the interest on only $750,000. Now, if you’re in the less spendy parts of the US, you probably don’t need to worry about this at all, but again, for those of you on the coasts where real estate prices are often hugely inflated by comparison, it may make a weighty difference.

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