The Tax Cuts and Jobs Act, which went into effect on December 31, 2017, includes several key provisions that will impact homeowners, homebuyers, and real estate investors:
- The mortgage interest deduction is capped at $750,000 for new loans taken out after 12/14/17, although current loans of up to $1 million are grandfathered.
- Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest as long as the new loan does not exceed the amount of the mortgage being refinanced.
- The deduction for interest paid on home equity debt through 12/31/25 is repealed.
- Interest remains deductible on second homes.
- The tax rate schedule retains seven brackets with slightly lower marginal rates.
- An itemized deduction of up to $10,000 is permitted for the total of state and local property taxes and income or sales taxes.
- The moving expense deduction and exclusion is repealed, except for members of the Armed Forces.
- The deduction for casualty losses is repealed, unless it is a presidentially declared disaster.