Property Taxes - Pay Now?
As you have probably heard, the new tax laws could impact the deductibility of your property taxes. As a result, many people are paying their April 2018 installment now. Contact your CPA today to determine if it will benefit you to pay early. You only have a few days left.
The Tax Cuts and Jobs Act of 2017 bill was signed into law on Friday, December 22, setting a property tax deduction limit of $10,000 going forward in 2018. Nationwide, over four million Americans pay more than $10,000 in property taxes alone.* If you include income taxes, the number of people who stand to lose out on their full deduction could be significantly higher.
Last-minute changes to the Tax Bill include the following improvements:
• Capital gains exclusion. In a huge win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.
• Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000.
• State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.
• Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities.
If you have questions about how the new Tax Bill will affect you, please contact me. I can provide recommended CPA's who can help you better understand your specific scenario.