The new tax law that went into effect December 2017 will result in changes for home buyers, sellers and consumers in general. Here are four key areas and how these new laws may affect you; keep in mind that these are just insights and do not take the place of personalized advice from a tax professional or financial adviser.
1. Deductions for interest payments on mortgages up to $1.1M are going away.
The mortgage interest deduction is changing; current mortgage holders will be grandfathered in, “but the deductible limit drops to $750,000 for new debt incurred after Dec. 31, 207,” according to factcheck.org. The areas most affected by this will be the high-priced coastal areas such as Los Angeles, San Francisco, and New York.
2. Deductions on HELOC interest are changing.
Homeowners will no longer be allowed to deduct interest paid on home equity lines of credit (HELOC) that are not considered home acquisition debt. The deduction will only be allowed if funds are used to ‘acquire, build, or substantially improve their residence.”
3. Mortgage interest rates may increase.
Experts are predicting that mortgage interest rates will reach 5 percent for a 30-year-fixed mortgage by the end of 2018.
4. You may see a Southern Migration.
State and local tax deductions are disappearing as well. This means that high-tax states such as New York and Connecticut will see people leave for Florida, Texas and Nevada, the three sunniest states with no state income tax.
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