CAPITAL GAINS EXCLUSION: In a HUGE win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.
MORTGAGE INTEREST DEDUCTION: The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit on primary and secondary homes. The House bill sought a reduction to $500,000.
STATE AND LOCAL TAX DEDUCTIONS: Both property taxes and state & local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.
PASS-THROUGH ENTITIES (LLC & S CORPORATIONS): The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities.
CHILD TAX CREDIT HAS BEEN EXPANDED: The child tax credit has DOUBLED to $2,000 for children under 17. It’s also now available, in full, to more people. The entire tax credit can be claimed by single parents who make up to $200,000 and married couples who make up to $400,000.
STUDENT LOAN INTEREST: The deduction for student loan interest, which is up to $2,500 per year, IS SAFE!
TEACHERS CAN STILL DEDUCT CLASSROOM SUPPLIES: The deduction for teachers who spend their own money on school supplies was left alone. Educators can continue to deduct up to $250 to offset what they spend on classroom materials.
For a complete listing of all tax reform stipulations, contact me anytime: [email protected]