In 2017, the Senate passed the Tax Cuts and Jobs Act. This resulted in doubling the Standard Deduction for Individuals. What does this mean for homeowners?
Homeowners who want to itemize using the Schedule A need to exceed the Standard Deduction of $30,000.00 for married filing joint or $15,000.00 filing single. Most software programs will automatically adjust to the appropriate filing.
The most important thing to keep in mind is that if you do make home improvements ( Energy Credits will be discussed in a different topic) it does benefit to retain good receipts to substantiate the basis of the home along with the Fair Market Value only when you intend to sell.
The ability to write off Mortgage Insurance Premium expired in 2021.Home Affordable Modification Program is not taxable. First Time Homebuyer Credit also expired and there is nothing in the pipes to extend this credit. Home Equity Lines of Credit otherwise known as HELOC are only deductible to the extent it was used for home improvement. Keep in mind this only applies to the interest and not the loan itself.
Mortgage Debt Forgiveness also expired last year.
The good news is that the State and Local Taxes are still deductible on our State Return. When we input these taxes on our 1040 the program moves it to the 540.