Tax season is underway and there has been a lot of discussion around the new tax law and how it will affect your wallet. Andrew Braun, with Berkshire Hathaway HomeServices Indiana Realty, breaks down some of the changes from the new tax law.
The new tax law affects almost every tax payer and it is the biggest change on the tax reform in 30 years. “The big highlights are lower tax rates for all individual tax payers, corporate tax rates are going down, and there is a 20% tax reduction if you qualify based on your income level,” Braun said. “Also, your standard deduction is almost doubling, but you must factor in the elimination of the personal exemption. This means it is not a true double, but it is better for most people. It is a lot of tax reform and a lot of changes that are happening.”
If you are a homeowner, the National Association of Realtors lobby hard to keep a lot of the benefits in place for homeownership. “These benefits include the gain on the sale of your home of up to $250,000 if you are single, and $500,000 if you are married. If you have lived in your home for 2 of the last 5 years, there still is a home mortgage interest deduction if you itemize. If your mortgage is less than $750,000, you still get the mortgage interest deduction,” Braun Said.
For people who rent their homes, they are not affected at the federal level to what they were prior to the tax reform. Renting has no real tax benefit while buying or refinancing a home has some tax benefit. “The gain is a huge thing – the government does not give many tax-free dollars, so the gain on your house can be up to $250,000-$500,000 tax free. You also still have the ability to potentially write off your home mortgage interest on your taxes,” Braun said.