Shifting Sands

There are some things said about taxes that become truths through their repeating and live forever in the societal mindset. One hears jokes about how getting married or having kids are being done just for the tax benefits. And well, it’s not as if there’s no truth there, but little enough of it that it’s probably not worth buying diapers for it. There is also a concept that owning a house brings some great benefit, but that also is not as much as some would believe.

A big shift in this area came when the Tax Cuts and Jobs Act of 2017 was passed in the first Trump administration. This changed the standard deduction for a married couple from $13,000 to $24,000 for a joint return. That kept many homeowners from receiving benefits because taxpayers must itemize their deductions to deduct homeownership expenses and many fewer were itemizing following this change..

For those who do itemize their deductions, though, there can still be benefits to home ownership. Home mortgage interest and state and local real estate taxes can be deducted and depending on the size of your mortgage or location of your home, they can add up quickly.

But remember that all these rules are subject to change. And just as the TCJA affected the standard deduction, it also capped the amount that can be deducted for state and local taxes. As with most things then, the passage of that bill made some people happy, and some people fumed over it.

And also remember there is a current push in Congress for another bill that will affect the tax rules. There is no telling exactly when this bill will be passed and it is impossible to know exactly what it’s going to include, but the fact that something will be passed at some point looks inevitable.

Hearkening back to the first point, don’t accept things as forever gospel even if you have heard them many times. There seems to be a shakeup coming and it could very well affect some things that have been true for a long time. By staying on top of it, though, you can at least keep it from becoming an unwelcome surprise and maybe even be ahead of things enough to use it to your advantage.

Warmly,

Josh Bousquet
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