Homeowners previously were able to write off the interest on mortgages up to $1 million. Under the new tax law, however, the cap has been reduced to $750,000 in qualified residence loans. According to the IRS, that limit applies to the combined amount of loans you use to buy, build or improve your primary or second home.
The good news is this only applies to new homeowners. The $1 million cap still applies to homeowners who took out a mortgage before December 15, 2017. New homeowners can take this deduction on mortgages up to $750,000.
Personal Exemptions
Taxpayers may no longer claim the personal exemption which reduced everyone’s taxable income by $4,050 last year.
Alimony Deduction
Previously, couples could set up alimony agreements that would allow the person making payments to deduct that money from their federal taxes. While divorce agreements finalized before Dec. 31, 2018, can continue to deduct alimony payments, that won\’t be an option for anyone whose separation was completed after that date.
Moving Expenses
If you relocated for a new job last year, forget about deducting your moving expenses from your 2019 taxes. Active duty military members and their families may still deduct moving expenses on their 2018 tax return and in years to come. For non-military taxpayers, however, moving expenses are no longer deductible, even if the relocation is a job-related move.
Miscellaneous Itemized Deductions
Unreimbursed work expenses are just one of several miscellaneous itemized deductions that have been disallowed under the new law. Other disappearing miscellaneous deductions include fees for financial services, costs related to tax preparation services, investment fees, professional dues and a long list of other previously approved items.
Casualty and Theft Losses
Prior to the latest tax bill, victims of fires, earthquakes, floods or similar natural disasters who experienced uninsured losses greater than 10 percent of their adjusted gross income could deduct a portion of those losses from their taxable income.
Now, you’ll only be able to claim these deductions if they are a result of a federally declared disaster. Those designations are made on a county basis, which means some areas could be declared official disaster zones, while others could not.
Unrestricted home equity loan interest deduction
Before the new tax law, homeowners could deduct interest paid on a home equity loan or line, or credit of up to $100,000, regardless of how the funds were used. For example, if a homeowner used a home equity loan to pay off credit card debt, they’d receive a tax break on the interest paid. Now, unless the taxpayer used the borrowed funds to buy, build or substantially improve either their primary home or a second home, the interest is not deductible.
