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Tax Deductions for Homeowners: How the New Tax Law Affects Mortgage Interest

12/23/2018

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Article From HouseLogic.com
By: Leanne Potts
Published: December 21, 2018
​
Tax changes for 2019 change the landscape for homeowners.

Tax season is upon us once again, and to make it even more interesting this year, the tax code has changed -- along with the rules about tax deductions for homeowners. The biggest change? Many homeowners who used to write off their property taxes and the interest they pay their mortgage will no longer be able to.
Tax season is upon us once again, and to make it even more interesting this year, the tax code has changed -- along with the rules about tax deductions for homeowners. The biggest change? Many homeowners who used to write off their property taxes and the interest they pay their mortgage will no longer be able to.

Stay calm. This doesn't automatically mean your taxes are going up. Here's a roundup of the rules that will affect homeowners -- and how big of a change to expect.

Standard Deduction: Big Change
The standard deduction, that amount everyone gets, whether they have actual deductions or not, nearly doubled under the new law. It's now $24,000 for married, joint-filing couples (up from $13,000). It's $18,000 for heads of household (up from $9,550). And $12,000 for singles (up from $6,500).
Many more people will now get a better deal taking the standard than they would with their itemizable write-offs.
For perspective, the number of homeowners who will be able to deduct their mortgage interest under the new rules will fall from around 32 million to about 14 million, the federal government says. That's about a 56% drop.
"This doesn't necessarily mean they'll pay more taxes," says Evan Liddiard, a CPA and director of federal tax policy for the National Association of REALTORS? in Washington, D.C. "It just means that they'll no longer get a tax incentive for buying or owning a home."
So will you be able to itemize, or will you be in standard deduction land? This calculator can give you an estimate.
If the answer is standard deduction, you'll be pleased to know that tax forms are easier when you don't itemize, says Liddiard. Find instructions for IRS Form 1040 here.

Mortgage Interest Deduction: Incremental Change
The new law caps the mortgage interest you can write off at loan amounts of no more than $750,000. However, if your loan was in place by Dec. 14, 2017, the loan is grandfathered, and the old $1 million maximum amount still applies. Since most people don't have a mortgage larger than $750,000, they won't be affected by the cap.
But if you live in a pricey place (like San Francisco, where the median housing price is well over a million bucks), or you just have a seriously expensive house, the new federal tax laws mean you're not going to be able to write off interest paid on debt over the $750,000 cap.

State and Local Tax Deduction: Degree of Change Varies by Location
The state and local taxes you pay -- like income, sales, and property taxes -- are still itemizable write-offs. That's called the SALT deduction in CPA lingo. But. The tax changes for 2019 (that's tax year 2018) mean you can't deduct more than $10,000 for all your state and local taxes combined, whether you're single or married. (It's $5,000 per person if you're married but filing separately.)
The SALT cap is bad news for people in areas with high taxes. The majority of homeowners in around 20 states have been writing off more than $10,000 in SALT each year, so they'll lose some of this deduction. "This is going to hurt people in high-tax areas like New York and California," says Lisa Greene-Lewis, CPA and expert for TurboTax in California. New Yorkers, for example, were taking SALT deductions averaging $22,000 a household.

Rental Property Deduction: No Change
The news is happier if you're a landlord. There continue to be no limits on the amount of mortgage debt interest or state and local taxes you can write off on rental property. And you can keep writing off operating expenses like depreciation, insurance, lawn care, and utilities on Schedule E.

Home Equity Loans: Big Change
You can continue to write off the interest on a home equity or second mortgage loan (if you itemize), but only if you used the proceeds to substantially better your home and only if the total, combined with your first mortgage, doesn't go over the $750,000 cap ($1 million for loans in existence on Dec. 15, 2017). If you used the equity loan to pay medical expenses, take a cruise, or anything other than home improvements, that interest is no longer tax deductible.
Here's a big FYI: The new rules don't grandfather in old home equity loans if the proceeds were used for something other than substantial home improvement. If you took one out five years ago to, say, pay your child's college tuition, you have to stop writing off that interest.

4 Tips for Navigating the New Tax Law

1. Single people may get more tax benefits from buying a house, Liddiard says. "They can often reach [and potentially exceed] the standard deduction more quickly." You can check how much you're likely to owe or get back under the new law on this tax calculator.
2. Student loan debt is deductible, up to $2,500 if you're repaying, whether you itemize or not.
3. Charitable deductions and some medical expenses remain itemizable. If you're generous or have had a big year for medical bills, these, added to your mortgage interest, may be enough to bump you over the standard deduction hump and into the write-off zone.
4. If your mortgage is over the $750,000 cap, pay it down faster so you don't eat the interest. You can add a little to the principal each month, or make a 13th payment each year.

As always, please consult a professional tax accountant with more specific questions. 
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Happy 2019!

12/22/2018

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303Magazine recently published this wonderful article about 100 Things To Do in Colorado in 2019.  

"Sure, it’s nice to have our incredible state highlighted by national publications like USA Today (who just named Winter Park the best ski town in North America) or Vogue (who wrote about the Denver restaurant, bar and street art scene) — but when it comes down to it, we don’t need non-Coloradans telling us why our state is simply the best. From the mountains to the plains, from north to the south and everywhere in between, Colorado has an adventure at every mile marker. Whether you want to travel for art or the outdoors, see the sights in Denver or spend a few nights in a picturesque setting, there is never a dull moment — especially when you have a list of 100 things to do in Colorado in 2019. Some of these are special to the year — as in, you won’t see them in 2020 — and some are the tried-and-true Centennial State bucket list items. Whether you’ve lived here your whole life or just arrived, check off all these activities and thank us later."

To see the entire list and to read the article, please click here:

https://303magazine.com/2018/12/100-things-to-do-in-colorado-in-2019/?fbclid=IwAR1gTGaVAfLt3DmgmViUuxESEzU54NyEYTDN-JqUUjU_CWk9xkQ3kgKfS1w

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Denver Family Friendly Holiday Road Trips: Ride the Santa Express on the Royal Gorge Train Route

12/18/2018

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Written by Kristin Kleimann-Duggan
 
Are you and your family both train and holiday enthusiasts? Do you like beautiful scenery, holiday lights, meeting Santa, and good food and drinks? Do you enjoy adventures close to Denver? If so, the Santa Express on the Royal Gorge Train Route may be just what you are looking for…
 
Our Experience
This past weekend, our family and some friends took the 2-hour roadtrip (each way) to ride the Santa Express in Canon City. We decided to stay overnight in Canon City to make the overall trip more tolerable for the young children, oh, and for us. The length of the train trip (2 hours) was perfect, the scenery and holiday lights gorgeous, the experience nostalgic, and the food and drink delicious. 
 
Once you board the train, you are provided hot chocolate and cookies to snack on. As the train starts its journey, they play Holiday music and conduct sing alongs. If it is still light out, you are treated to spectacular views of both the gorge and the Arkansas River, and possibly the sunset. There are a few open air cars that you can go to to really experience the views. Once the train reaches the “North Pole,” which is all done up with lights, Santa and the elves board. The elves come around and give each child a bell from one of Santa’s reindeer. Santa also makes his way to talk to the children and collect their wish lists. We absolutely loved the adventure and highly recommend the overall experience.
 
The Details
For 2018, trips are offered November 16th-December 30th. Trips are scheduled up to four times daily: generally, 9:30, 12:30, 4:30, and 6:30. Some dates are less expensive than others so do check their website schedule. There are several different classes of service offered including Vista Dome, Club, and Coach. The ticket price varies by class. 
 
We opted for the Vista Dome class and purchased our tickets (easily) online in advance. Vista Dome service provided us with 360-degree views, assigned seats at a table (seats are in groupings of four so we were all seated together), and table side food and drink service (food and drink are not included in the ticket price, but purchasing food in advance is an option.) Food, drinks, and the full service bar are available to all classes of service. Passengers are also permitted to visit the open air car as frequently as they’d like and at any point in the trip. 
 
One of the highlights of the tour is seeing the Royal Gorge bridge from a unique vantage point, below it! The Royal Gorge bridge is the world’s highest suspension bridge and is located at the narrowest and deepest point in the gorge. The train stops under the bridge for a few minutes for viewing and for photo opportunities. 
 
A Very Brief History of the Royal Gorge Route
The Royal Gorge route opened in 1879 and cost $11,759 (about $250,000 in today’s dollars) but service eventually ended in 1967 for a variety of reasons. The Royal Gorge historic rail line was resurrected in 1999 with the goal of creating “an entirely new Colorado experience featuring excellent food, friendly service and memorable events while sharing the most spectacular scenery in the Rocky Mountain West” (Royal Gorge Route Railroad “Signal” Publication). The route is run by a private, family owned Colorado company passionate about good food and wine. 
 
Trip Tips
  • Children (and families) are encouraged to wear pajamas and children can bring their Holiday wish list.
  • Only bottled water is permitted on the train. No outside food or drink.
  • Strollers and car seats are not allowed onboard.
  • Backpacks are not allowed onboard and bags are subject to search.
  • There ARE restrooms on board.
  • The special holiday grill menu is available to all classes of service including food, drinks, and a full service bar (toot! toot!).
  • Drive time from Denver is about 2 hours.
  • Length of ride is about 2 hours.
  • Unless you live close by, it’s recommended to purchase your tickets in advance to guarantee you have seats (pick up your tickets at “Will Call”, 45 minutes prior to departure).
  • Ticket prices vary by class of service and options. (Figure about $34-69 for children and $44-74 for adults)
  • Over 30,000 guests ride the Santa Express each year, so advance reservations are recommended. 
  • For same day booking, call and check with the reservations department before making the drive.
For more information:
Visit: www.royalgorgeroute.com or call 1.888.724.5748
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