Many homeowners are wondering how the new tax law will affect them, particularly the changes to tax benefits that previously incentivized homeownership.
One of the most noteworthy changes in the new legislation is that households that pay more than $10,000 in combined state and local taxes each year are no longer able to deduct all local property taxes paid for the year. This matters a lot in areas with lower home prices, but higher taxes like upstate New York, southern New Jersey, and inland California, where SALT deductions make itemizing more important, per Zillow.
This reform definitely removes some the federal government’s preferential treatment towards homeowners. Ultimately, more households will be more likely to maximize their tax breaks with a standard deduction rather than with individual, itemized deductions ... This could remove the incentive to spend a little more on a home in hopes of recouping some of that spend come tax season.
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