Buying a home was not merely an American Dream.. It also came with attached tax benefits and deductions.
However, the new sweeping tax bill passed by President Trump in December 2017, may change the math for many homebuyers. The new law limits or eliminates several write-offs long favored by homeowners.
On one hand, standard deductions have doubled and tax rates have fallen, on the flip side, there is a $ 10,000 cap on state and local tax deduction and a lower $750,000 limit on loan principle for the mortgage interest deduction.
New Jerseyans, by most accounts, got the short end of the stick. But about 79 percent of residents in the Garden State should receive tax cuts, according to a study by the Institute of Taxation and Economic Policy, a research group.
But what changes is the homebuying vs renting equation! In other words, with certain homeowning tax breaks getting less generous, the financial advantage of owning rather than renting your own home could diminish for many Americans.
Then Why Buy?
- Can still deduct interest and taxes below the threshold, provided it still makes sense to itemize
- Protection against inflation
- Possible appreciation – build equity and wealth over time
- Modify the living space as wished
- Most importantly, have a roof over the head