How the Tax Bill Affects Homeowners


A recap of how the new tax bill affects homeowners with information from the National Association of Realtors, RPM Mortgage, and

Mortgage Interest Deduction

  • The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after 12/14/17. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
  • Homeowners may refinance mortgage debts existing on 12/14/17 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
  • The final bill repeals the deduction for interest paid on home equity debt through 12/31/25. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
  • Interest remains deductible on second homes, but subject to the $1 million / $750,000 limits.
  • In higher cost areas where larger loan amounts are more common, this change in the mortgage interest deductions may make it easier to opt out from itemizing. With the standard deduction increasing to $12,000 for individuals and $24,000 for married couples, many homeowners may find it is more beneficial to use the standard deduction amount instead of itemizing amounts paid on mortgage interest.

Property Taxes

  • Today homeowners get to deduct all property taxes they pay when filing their taxes each year. The bill caps this deduction at $10,000.
  • For homes in higher priced markets, the cap of $10,000 will remain, so if you’re concerned about what this means if you buy a home, contact the KJM Team or a loan advisor to help you analyze your options.

Capital Gains

  • The final bill retains current law. 
  • Today homeowners are exempt from paying capital gains taxes on gains up to $250,000 (or up to $500,000 for married couples) when selling a primary residence. If you lived in the home two of the last five years, this means you’d pocket home appreciation up to $250,000 (or up to $500,000 if you’re married) tax free when you sold your home and then pay capital gains taxes on any appreciation above this amount—the calculation is a bit more complex, but this is the gist.
  • Earlier tax reform proposals would have increased the threshold, but this bill keeps the two-year minimum so many homeowners who may want to sell can still receive this benefit.

If you have specific questions about what this means for you and your family, feel free to email us at