April 15th is looming … and due to the Tax Cut and Jobs Act, this may be the last year you can claim your typical property-related deductions. And the rumor-mill is running rampant! How many of these income tax falsehoods & exaggerations have you heard? The Seay Realty Group wants to set the record straight! We hope that, by comparing 2017 vs 2018 tax rules, it will help clarify things for you! Here we go:
Moving Expenses – can you ALWAYS deduct them?
2017 – A portion of moving expenses are deductible, but only if you moved for a new job that’s at least 50 miles further from your old home then your former job location was.
2018 – NO moving expenses are deductible, unless you are a member of the armed forces on active duty.
Home Renovations – still not really deductible, right?
Right. Renovations are generally not tax deductible unless the residence also serves as a rental property OR if made for medical necessity.
2017 – Renovation expenses that can be deducted are limited, and must exceed 10% of your adjusted gross income
2018 – Same limitations as 2017, except the amount must exceed 7.5% of your adjusted gross income.
Working from Home – I can deduct a home office, true?
2017 – If you sit on the couch with a laptop and do your work in between binge watching, no way! But if you have dedicated a room as a home office that is used regularly and exclusively for business, and is the primary location of your business, you can claim it. If you work from home occasionally, you can sometimes claim business expenses not covered by your employer.
2018 – Only self-employed people can deduct a home office. If you get a W-2 from an employer, you’re not eligible!
Property Tax Deduction – it vanishes, doesn’t it?
2017 – Last year that deductions for state, city and property taxes are allowed in full.
2018 – Beginning in 2018, until 2026, these taxes will still be deductible, but with a $10,000 per year cap.
Mortgage Interest Deduction – I heard it’s gone?
2017 – If you bought your home before December 15, 2017, you’re grandfathered in under the old tax laws – you can deduct all the interest on loans up to $1 million
2018 – If you bought your home after December 15, 2017, or plan to purchase a home in the future, mortgage interest is still deductible. However, it’s capped at $750,000.
Home Equity Interest – I thought I could deduct all of the interest!
2017 – You can turn to a home equity loan or line of credit (HELOC) for cash to make home improvements or for general expenses (college tuition, wedding). The interest on these loans is tax deductible.
2018 – Looks like HELOC interest is ONLY deductible if the loan is used for substantial home improvement. Also looks like your total deductible mortgage & eligible home equity debt must be less than the $750,000 cap.
Finally, you KNEW this blog post would need a disclaimer, right?
Keep in mind, The Seay Realty Group are REALTORs®, not tax accountants, and these statement are not intended to advise you about filing your taxes!