Dear Clients and Friends,
Our new tax law doubles the standard deduction to $12,000 for an individual filer and to $24,000 for a married couple. (The IRS standard deduction is the portion of income that is not subject to tax, thereby lowering your overall tax burden. Taxpayers may choose to take the standard deduction or itemize deductions instead.)
Doubling the standard deduction means fewer people will have the incentive to itemize. The nonpartisan Tax Policy Center estimates that the number of itemizers will fall from about 49 million to 10 million.
For example, if you’re married and filing jointly and paid $20,000 in mortgage interest and property taxes, you would have itemized those deductions in the past, getting a nice little perk for homeownership. But beginning in 2018, you will take the standard deduction instead.
While the shift doesn’t necessarily change a person’s overall tax burden, it does remove the tax write-off that comes with homeownership. That could change the rent vs. own decision for first-time buyers.
According to Zillow, about 44 percent of homeowners were better off itemizing prior to the tax changes. That number has now dropped to just 14.4 percent. That means a big incentive to buy is now gone for about a third of potential home buyers.
If you or a loved one have a Family Law, Real Estate or Tax Collection Defense matter that we might be able to help with, we continue to invite your use of our free initial phone evaluations of your current challenge.