As you know by now, late in 2017 Congress passed the Tax Cuts and Jobs Act, which puts into effect more than 600 rule changes to the Tax Code. Many homeowners are wondering how they will be affected as W2s and 1099s begin to arrive by mail this week before the January 31 deadline.
An article posted by the Florida Association of Realtors this week specifically addresses some of these changes, particularly the property tax deduction.
According to the article, some homeowners might be limited on how much they can deduct, if anything, for property taxes. Over the next 8 years, the property tax deduction is limited to $10,000 for individuals who paid state and local real estate taxes, personal property taxes and income taxes ($5,000 for married couples filing separately).
Average Floridians could see fewer changes than other states with higher than average state tax burdens like California and New York. Others who will be vulnerable to changes are those with second homes. This also depends on whether or not you itemize… If you paid $12,000 in state and local taxes, you’re still looking at a $10,000 deduction. It’s recommended that homeowners run numbers with and without itemizing to see what nets them the best return or bill.
Another item that might be of interest…the Child Tax Credit. Many parents with children under the age of 16 will see a $2,000 credit, up from $1,000 in previous years. In addition, if your income meets a minimum of $2,500, you are eligible to receive $1,400 of this credit as a refund, per child. So for some families, the tax credit will be greater than their tax liability.
If you haven’t already, contact your accountant for a full report on how the new laws will affect you. A great resource if you don’t already have a trusted local tax accountant is DaveRamsey.com.