Homeowners ‘Tax Snags’ Update

Tax season is here, and many homeowners may have questions about what they can and can’t write off under the new tax code.

One big change: Homeowners who used to write off property taxes and interest paid on their mortgage may no longer be able to entirely. But that doesn’t necessarily mean they’ll pay higher taxes. HouseLogic, the National Association of REALTORS®’ consumer-facing website, offers guidance and worksheets on the changes for homeowners.

Under the new law, the standard deduction every tax filer gets has nearly doubled ($24,000 for married couples who file jointly and $12,000 for single filers). Most people likely will be better off taking the standard deduction than itemizing their write-offs.

Other interesting information at: “Tax Deductions for Homeowners: How the New Tax Law Affects Mortgage Interest,” HouseLogic.com (2019) and “Are Closing Costs Tax Deductible Under the New Tax Law?” HouseLogic.com (2019)

Prepay Property Taxes Before Losing Benefits

With tax reform signed into law, homeowners in areas with high property taxes are scrambling to prepay their 2018 tax bill in order to take advantage of deductions that will curtailed once the legislation takes effect Jan. 1. The new tax law, which Congress passed and President Donald Trump signed, caps the amount of state, local, and property taxes that homeowners can deduct at $10,000.

However, there’s no guarantee homeowners who prepay their 2018 property taxes will be able to deduct the payment. On Wednesday, the IRS posted an advisory notice that said prepaying property taxes will work only under limited circumstances. To qualify for the deduction, property taxes will need to be paid in 2017—but they also must be assessed in 2017, The New York Times reports.

Source: “Homeowners Scramble to Pre-Pay Property Taxes,” CNNMoney (Dec. 27, 2017) and “Prepaying Your Property Tax? IRS Cautions It Might Not Pay Off,” The New York Times (Dec. 27, 2017)