The New Tax Laws and Your Mortgage

The tax bill that was passed in 2018 will have many impacts on homeowners’ tax returns. The good news for those who are looking to buy a home in Nevada is that the new laws will not sting as hard as they would in other states.

New Tax Laws on Mortgage Interest

Can I still Deduct My Home Interest Mortgage?

The good news is that you may still deduct home mortgage interest. The bad news is that there is now a limit on what you can deduct. The new tax laws state that homeowners can deduct interest on up to $750,000 of principal on their loan. This is down from $1,000,000 under the previous laws. Since the median home in Nevada is valued at under $300,000, most people will be able to continue to make full use of this popular tax deduction. Since the standard deduction for married couple has been raised, it may not make sense for homeowners to take this deduction anymore. (Think you’re qualified for a reverse mortgage? Read this!)

What Benefits Does the New Tax Law Have?

There is favorable treatment of home equity loans under the new laws. When you use the proceeds of a home equity loan to improve your residence or buy another residence, you can deduct the interest that you pay on the loan. This will encourage homeowners to take out a home equity loan since you are able to tap the equity in your own in an inexpensive way. Mortgage brokers in Las Vegas can explain the new provisions to you.

How Does the Limit on State Tax Deductions Affect You?

The good news if you are purchasing a home in Nevada is that the new curbs on deducting state and local taxes will not affect you as much as it would in other states. The new tax law imposes a $10,000 limit on deductions of state and local taxes. While this will have some impact on taxpayers, Nevada’s property tax rates are low compared to other areas, so this limit will not hit state taxpayers as hard as it would in other states. Given that there is no state income tax, any property taxes that are paid would be largely deductible by Nevada taxpayers.