Taxes are on my mind for a couple of reasons, that I would bet are reasons that put them on your mind as well:
- It’s year end, so tax filing season is right around the corner.
- The proposed changes going through congress right now.
I thought with my background as a CPA (although I have not been practicing in many years so I don’t claim to have a thorough knowledge of present tax law) and currently working in real estate, where there were some proposed changes, that I would take a minute to discuss.
Changes to the mortgage interest deduction – I don’t think this will affect many of us in West Michigan who don’t have the price points that the East and West Coasts have, but they have reduced the amount of mortgage interest that is deductible to only on loans up to $750,000 (if you had a larger note than this before then you are grandfathered in, this is for all new loans). Home equity lines of credit interest is only deductible if used to make substantial renovations to your home. If you use it to purchase a boat there is no deduction for this.
There was a proposal to change the amount of gain that is excluded on the sale of your personal residence to require that you have lived there longer. Currently the requirement is that it was your primary residence for two of the last five years. This time frame was proposed to be increased, but it was not.
One deduction that went completely away (except for members of the Armed Forces) is the deduction of moving expenses. I wonder if this will have more employers reimbursing for moving expenses as part of their recruitment package. This is already a common practice so I’m not sure how it will impact someone’s desire and willingness to make longer moves.
So, all in all, I don’t think that these law changes will have a very big impact on our corner of the world. Time will tell!
As always, if you do have questions about how this impacts you personally or the value of your home I am happy to help in any way that I can.