Mortgage Interest Deduction
The TCJA reduces the deductible mortgage interest on $750,000 ($375,000 in cases of married
taxpayers filing separately) of total acquisition indebtedness for primary and secondary homes in
the case of tax years beginning after 12/31/17.
The threshold of deductible mortgage interest on $1,000,000 of acquisition indebtedness
($500,000 in the case of married taxpayers filing separately) remains for acquisition indebtedness
incurred before 12/15/17. If this debt is refinanced, the debt threshold and deductible up to
$1,000,000 if it does not the amount of the debt being refinanced.
The conference agreement provides that a taxpayer who entered into a binding written contract
before 12/15/17 to close on the purchase of a principal residence before 1/1/18, and who purchases
such residence before 4/1/18, shall be considered to incur acquisition indebtedness prior to 12/
15/17 under this provision.
Special rules apply in the case of indebtedness from refinancing existing acquisition indebtedness.
Specifically, the $1,000,000 ($500,000 in the case of married taxpayers filing separately)
limitation continues to apply to any indebtedness incurred on or after 12/15/17, to refinance
qualified residence indebtedness incurred before that date to the extent the amount of the
indebtedness resulting from the refinancing does not exceed the amount of the refinanced
indebtedness. Thus, the maximum dollar amount that may be treated as principal residence
acquisition indebtedness will not decrease by reason of a refinancing.
The TCJA eliminates the deductible of mortgage interest from home equity loans in its entirety
Recommendation: Pay your home equity loan interest currently due by 12/31/17. Since the interest
will no longer be deductible, you will have to look at the retention of this home equity loan from
an investment standpoint.
Property Tax, State and Local Income Tax (SALT)
The TCJA will now limit annual itemized deductions of property tax plus state and local income
tax to $10,000 annually ($5,000 for married taxpayer filing a separate return).
Recommendation: If you itemize in 2017, we recommend that you pay your 2017 real estate taxes
prior to 12/31/17. In addition, if you pay estimated state and local income taxes you should pay
the 2017 4th quarter estimate due 1/15/18 prior to 12/31/17 instead.
Please note these taxes will continue to be deductible if paid or accrued in carrying on a trade or
business which includes rental property.
Exclusion of Gain from Sale of your Home
Under current law, you can exclude up to $250,000 ($500,000 for married taxpayers) in capital
gains from the sale of your home so long as you have owned and resided in the house for at least
two of the last five years. Additionally, the current law limits the use of the exclusion to one sale
every two years.
The TCJA was ultimately passed with no change to the current law as it stands on the sale of your