Tax Changes for Homeowners in FLORIDA

Given the implementation of the new tax plan, numerous Americans are anticipating alterations to their financial circumstances. Although there are provisions that specifically impact homeowners’ taxes, it’s essential to note that not everyone will be subject to these changes. Explore our latest post to gain a comprehensive understanding of how the new tax adjustments will impact homeowners in FLORIDA!

The Standard Deduction

The recent changes to the tax code have created a mixed bag for homeowners, with some seeing noticeable shifts in their tax liabilities while others may barely register any difference. These discrepancies are largely due to the variations in property values and local tax rates across different regions. For instance, homeowners in high-tax states might experience a reduction in the state and local tax deductions they can claim, potentially leading to higher overall tax bills. Conversely, those in areas with lower property taxes might find the changes negligible or even beneficial, depending on their specific circumstances. The impact is also influenced by individual factors such as mortgage interest and income levels, which play a critical role in determining one’s tax situation.

Moreover, the substantial increase in the standard deduction is a game-changer for many taxpayers. By nearly doubling the standard deduction, the new tax law simplifies the filing process for a significant portion of the population, as fewer people will need to itemize their deductions. This shift means that deductions for expenses such as mortgage interest, property taxes, and charitable donations will become irrelevant for those opting for the standard deduction. While this simplification benefits many by reducing the complexity of tax filing, it also diminishes the tax incentives for homeownership and charitable giving. Homeowners who previously itemized their deductions might find that the financial advantages of these deductions are no longer impactful, thereby altering their tax planning strategies and financial decisions.

Mortgage Interest Deduction

Until now, homeowners were able to deduct their mortgage interest up to one million dollars on their federal taxes. This deduction is now capped at $750,000. That said, approximately 94% of people with a mortgage aren’t paying that much to begin with. The good news is that if you purchased your house before December 15, 2017, you will still be grandfathered into the million dollar exemption, and be able to deduct a higher amount.

Property Tax Deduction

In the past, homeowners throughout the country could deduct the full amount of state, local, and property taxes they paid. However, the recent change imposes a cap of 10,000 on this deduction. While many individuals across the nation pay less than this threshold, homeowners in states with higher property taxes, such as California, New Jersey, and New York, are likely to experience more pronounced effects due to this limitation.

Home-Equity Loan Deduction

When people take out a home-equity loan, it is typically to make a large purchase. It can be for home renovations, repairs or even medical expenses. Under the new tax plan, homeowners can no longer deduct the interest paid on a home equity loan.

The Rules For Capital Gains

When selling their homes, homeowners can still take advantage of the Capital Gains exclusion, which allows homeowners to write off up to $250,000 of profit from the sale of a home. $500,000 if filing jointly. There was tak of changing this with the new plan, however, the Capital Gains exclusion remains as it was.

When engaging in the purchase or sale of any property in FLORIDA, it’s crucial to thoroughly examine all associated costs. The financial considerations extend beyond the mere sale price of the house. If you have inquiries or seek further insights, Core Real Estate Properties is readily available to provide assistance and information!

Are you ready to buy or sell a house in Fort Myers? We can help! Send us a message or give us a call today! 239-360-3176

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