The final tax bill passed by Congress in December of 2017 included a couple of last minute, final revisions to the real estate related changes outlined in my previous post. The tax reform had threatened to increase the amount of time required by homeowners to live in a home in order to avoid capital gains taxes on profits from two of the last five years to five of the last eight years. That proposed changed was dropped from the final bill. Homeowners still need only live in their home for two of the last five years to avoid the capital gains tax on profits of more than $250,000 (or $500,000 for married couples) on the sale of their primary residence. The other real estate related revision in the final bill was a change to the amount of mortgage interest homeowners can deduct. Previously, homeowners could deduct mortgage interest on up to $1 million dollars of mortgage. The latest version proposed reducing that deduction so that it applied to only $500,000 of mortgage. The final bill settled on interest on mortgages up to $750,000 being deductible. The final version also allows mortgage interest on second homes to be deducted, which had threatened to go away entirely in previous versions.
Posted on January 3, 2018 at 6:44 pm Katie Sengstake