with principal balance up to $100,000 regardless of how they used the proceeds, a HELOC principal balance now counts toward the $750,000 limitation described previously, just like the original mortgage. After tax reform, a homeowner can only deduct interest from their HELOC or home equity loan if they use the proceeds to make substantial improvements to their property.
In addition to the doubling of the standard deduction, Riley points to the change in treatment of state and local taxes commonly known as"" for some of these patterns. Under previous tax law, there was no limit on the amount of SALT taxes you could deduct against your federal income. In high cost of living areas, this allowed consumers to shoulder the cost burden of high property, income, and sales taxes more easily.
"I think at a very basic level, homeowners in high-tax, high-property value states will likely feel like they were dealt a bad hand by the Tax Cuts & Jobs Act because many of them will have lost a large itemized deduction," said Allec.