Dec. 22, 2017
When will the tax law go into effect?
First off: The soon-to-be tax law will not apply to your 2017 taxes -- the ones you have to file this coming April.
Most provisions of the new law affecting individuals and businesses go into effect on Jan. 1, 2018. For instance, new tax brackets take effect on January 1 of next year, as will the new standard deductions.
But not all of them do. Changes to tax deductions for alimony payments, for instance, will kick in for divorces that happen after December 31, 2018. And the penaltyfor not having health insurance will be eliminated in 2019.
And some provisions affecting individuals will be very short-term. The bill expands the medical expense deduction just for 2018 and 2019, for example.
Is my mortgage deduction the same as before?
Short answer: No.
Under the new law, if you take out a new mortgage you will only be allowed to deduct the interest on debt up to $750,000, down from $1 million today. Keep in mind that homeowners who already have a mortgage will not be affected by the change.
Related: Homeowners: Here's what's in the tax bill for you
Homeowners should also know that taxpayers may no longer be able to deduct all state and local property taxes plus income or sales taxes. Instead, the legislation allows individuals to deduct up to $10,000 in property taxes and state and local income or sales taxes.
You will still be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains when you sell your primary home, as long as you've lived there for two of the past five years.
Is the $10,000 limit for state and property tax deductions really the same for a single filer as for joint filers?
Yes. Under the new legislation, regardless of whether you're single or married, you're not allowed to deduct more than $10,000 of property taxes and state and local income or sales taxes.