2018 Tax Bill Changes Overview
Thinking about the 2018 tax bill in neither a fun nor an easy to understand topic. However, it is something that affects all of us.
I hope that the overview below comparing the 2017 rules to the 2018 tax bill will help you make the information more manageable.
One quick disclaimer: Laura Borja, Mann Mortgage and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide , and should not be relied on for, tax, legal or accounting advice. You should consult with your own tax, legal and accounting advisors before engaging in any transaction.
Standard Deduction/Personal Exemptions
- Personal Exemption of $4,150 with phase outs for higher incomes
- Standard Deduction
- Single - $6,500
- Married Filing Jointly - $13,000
- Married filing separately - $6,500
- Head of Household - $9,350
- Personal Exemption - Eliminated
- Standard Deduction
- Single - $12,000
- Married Filing Jointly - $24,000
- Married filing separately - $12,000
- Head of Household - $18,000
Itemized Deductions
- Itemized deductions allowed with reductions at income levels starting at $320,000 (married) and $256,700 (single)
- Individual deduction for state and local taxes (SALT) for income, sales and property is limited in the aggregate to $10,000 (married and single and $5,000 married filing separately)
- Most miscellaneous itemized deductions that were subject to 2% AGI floor will no longer be allowed (e.g. unreimbursed business expenses, tax preparation and investment expenses)
Mortgage Interest
- Principal Residence and second home mortgages up to $1,000,000 (married) or $500,000 (single)
- HELOC up to $100,000
- Principal Residence and second home mortgages up a combined $750,000
- Pre 12/16/2017 mortgages are grandfathered and new purchase money mortgages may be grandfathered if the purchase contract is dated before 12/16/17 (there are additional conditions)
- Refinancing of grandfathered mortgages are grandfathered, but not beyond the original mortgage's term/amount (some exceptions apply on balloon mortgages)
- HELOC interest no longer be tax deductible(Variable rules apply, check with your tax advisor)
Capital Gains
Maximum tax rate on long term capital gains is 20%
Unchanged
Capital Gains Exclusion for Primary Residence
Sale of a primary residence allows exclusion of gains of up to $500,000 (married) if 2 of 5 year rule is met
Unchanged
Like-Kind Exchanges (1031 exchange)
- Allows for the disposal of an asset and the acquisition of another replacement asset without generating a current tax liability for the gain on the sale of the first asset.
- Applies to like-kind exchanges of real property as well as certain categories of personal properties.
- Limits the applicability to the like-kind exchanges of real property that is not held primarily for sale
- This does NOT expire in 2025
Individual/ Joint Tax Rates
| Marginal Tax Rate | Single |
Married Filing Jointly |
|---|---|---|
| 10% | $0-$9,325 | $0-$18,650 |
| 15% | $9,325-$37,950 | $18,650-$75,900 |
| 25% | $37,950-$91,900 | $75,900-$153,100 |
| 28% | $91,900-$191,650 | $153,100-$233,350 |
| 33% | $191,650-$416,700 | $233,350-$416,700 |
| 35% | $416,700-$418,400 | $416,700-$470,700 |
| 39.6% | Over $418,400 | Over $470,700 |
| Marginal Tax Rate | Head of Household | Married Filing Separately |
|---|---|---|
| 10% | $0-$13,350 | $0-$9,325 |
| 15% | $13,350-$50,800 | $9,325-$37,950 |
| 25% | $50,800-$131,200 | $37,950-$76,550 |
| 28% | $131,200-$212,500 | $76,550-$116,675 |
| 33% | $212,500-$416,700 | $116,675-$208,350 |
| 35% | $416,700-$444,500 | $208,350-$235,350 |
| 39.6% | Over $444,500 | Over $235,350 |
| Marginal Tax Rate | Single | Married Filing Jointly |
|---|---|---|
| 10% | $0-$9,525 | $0-$19,050 |
| 12% | $9,525-$38,700 | $19,050-$77,400 |
| 22% | $38,700-$82,500 | $77,400-$165,000 |
| 24% | $82,500-$157,500 | $165,000-$315,000 |
| 32% | $157,500-$200,000 | $315,000-$400,000 |
| 35% | $200,000-$500,000 | $400,000-$600,000 |
| 37% | Over $500,000 | Over $600,000 |
| Marginal Tax Rate | Head of Household | Married Filing Separately |
|---|---|---|
| 10% | $0-$13,600 | $0-$9,525 |
| 12% | $13,600-$51,800 | $9,525-$38,700 |
| 22% | $51,800-$82,500 | $38,700-$82,500 |
| 24% | $82,500-$157,500 | $82,500-$157,500 |
| 32% | $157,500-$200,000 | $157,500-$200,000 |
| 35% | $200,000-$500,000 | $200,000-$300,000 |
| 37% | Over $500,000 | Over $300,000 |
Hope this comparison overview of the 2018 tax bill helps you to better understand how the changes might affect you. Remember, contact your legal or tax advisor for more information about how the 2018 tax bill will affect your tax liability.
If you have any questions about any mortgage or real estate related topic, by all means reach out to me.
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