Homeowners: Mortgage deductions are changing under TCJA
The deductions available to homeowners will change under the new Tax Cuts and Jobs Act (TCJA). It used to be that you could deduct the interest paid on a home loan of up to $1,000,000. Under the TCJA, this limit drops to $750,000; although, the updated rules apply to new mortgages only while existing home loans are grandfathered into the old system. The TCJA is also limiting itemized deductions for personal state and local property taxes and personal state and local income taxes (or sales taxes) to a combined total of only $10,000 ($5,000 if you use married filing separate status).
The only way you could potentially deduct more than $10,000 (or $5,000 if you use married filing separate status) is if you own a home that is used partially for business or partially rented out. In those situations, you could deduct property taxes as business or rental uses on top of the $10,000 limit. If you pay both state and local property taxes and state and local income taxes, trying to maximize your property tax deduction may reduce what you can deduct for state and local income taxes.
One current break that the TCJA preserves is the exclusion from federal income tax of a gain from a qualified home sale. Individual who sell a home may exclude up to $250,000 of gain from a sale, or $500,000 if you are a married joint-filer.
Keep in mind, most of these changes won’t matter unless you have enough itemized deductions to exceed the new, nearly doubled, allowable standard deduction of $12,000 for individuals or $24,000 for couples filing jointly.