Between tax law changes, insurance industry responses to disasters, and fluctuations in the market in general, the finances of owning a home are likely to shift in this new year—and mostly for the worse.
Here’s what we’re looking at:
- A lower limit has been placed on the amount of mortgage debt a homeowner can deduct interest on—it has gone from $1 million to $750,000.
- Deducting interest on a home equity loan will be possible only when the loan is used to substantially improve the home itself.
- The moving-expense deduction has been done away with.
- Property tax payments will no longer be as valuable a deduction. The maximum taxpayers will be able to claim for combined state and local taxes is $10,000 ($5,000 for a married taxpayer filing a separate return), which maximum includes deductions for property tax as well as income tax and sales tax. An exception will be made if the property is being used to carry out a trade or business. Residents of California, Connecticut, New Jersey, and New York are reportedly likely to be the hardest hit by this.
- Homeowners’ insurance rates are expected to go up in California, Texas, and other states that were ravaged by fires, storms, or other natural disasters in 2017. It doesn’t matter if your region was not affected—rate increases are implemented on a statewide basis, for regulatory compliance reasons.