Taxes and the Homeowner
Whether you're an owner now or expect to be one in the future, it is important to be familiar with the federal tax laws that affect homeownership. Since personal income tax was enacted in 1913 with the 16 th amendment, homes have had preferential treatment. The mortgage interest deduction is based on up to $750,000 of acquisition debt used to buy, build or improve a principal residence. In addition to the interest, the property taxes are deductible, limited to the new $10,000 limit on the aggregate of state and local taxes (SALT). The taxpayer may also deduct interest and property taxes subject to limits on a second home. Homeowners can decide each year whether to take itemized personal deductions or the allowable standard deduction which was significantly increased under the Tax Cuts and Jobs Act of 2017. Single taxpayers may exclude up to $250,000 of capital gain on the sale of their home and up to $500,000 if married filing jointly. They must have owned and lived