Home ownership is a dream of many Americans. Before buying any home you should carefully calculate whether is makes any economic sense to do so. Most people are better off financially if they rent and invest in a sound retirement plan. The 2018 increased federal standard deduction will remove the federal mortgage interest deduction for most Americans.
Home equity loan information
New rules starting in 2018 will limit the interest deduction on a home equity loan, a home equity line of credit (HELOC), or a second mortgage. Interest on these loans are now limited to the interest on the first $750,000 of principal. The loan must be used to buy, build, or substantially improve your first or second home.
Selling a Home
A home seller who is a single taxpayer may qualify to exclude, from their income, the first $250,000 of profit from the sale of a home he/she has owned and lived in for two of the last five years. The two years of ownership and occupancy do not have to be consecutive yeas. A married couple may qualify to exclude the first $500,000 of profit from income.
New tax law changes
The maximum total interest and property tax deduction is now $10,000. The new standard deduction for a single person is now $12,000 and the new standard deduction for a married couple is now $24,000. Taxpayers can choose to deduct the standard deduction or the total of their mortgage interest, property tax, state income tax, charitable contributions, etc, whichever is greater. So for almost all taxpayers, the mortgage interest deduction will no longer be useable.