Congress recently passed and President Trump signed into law a sweeping overhaul of the federal income tax structure. The experts are still sorting out all of the various parts of the very complicated law and its potential impact on individuals and businesses.  Discussed here are some of the changes in the tax code most likely to affect residential homeowners.  This blog presents a broad overview, so it is important that each individual consider their own tax situation and discuss any questions regarding their taxes with a tax professional.

There are three specific provisions that may directly affect residential homeowners.

Cap on Amount of Mortgage Interest Deduction:  Under the new law, the maximum loan amount on which interest may be deducted is decreased to $750,000 from the current $1,000,000.  This means that only interest paid on the first $750,000 in mortgage debt is deductible.  Note that this change only affects new mortgage originations; it does not change the limit for mortgages already in place.  The law also continues to allow interest on mortgages for first and second homes to be deducted.

No more deduction for interest paid on home equity loans:  Under the prior law, interest paid on home equity loans up to $100,000 was deductible.  Under the new law, interest paid on any home equity loan is no longer deductible.  This change does affect any existing home equity loans, unlike the mortgage interest cap which only takes affect for new mortgages.

Cap on state and local tax deduction:  The change most likely to be felt by homeowners in Connecticut is the new cap of $10,000 on the deduction of state and local taxes (“SALT”).  Currently any amount paid on SALT (state income tax and local taxes paid on cars and homes) is deductible for most taxpayers.  The final tax legislation capped that amount for all taxpayers at $10,000 total.  For many Connecticut homeowners, between their car and house taxes, they pay over $10,000 without even taking into account their state income tax payments.  This is the change likely to have the greatest impact, especially in towns with high property taxes.

Keep in mind that this blog post just describes three provisions out of many that are in the new tax law, which also decreases rates and increases the standard deduction. However there is no doubt that the new law affects some of the deductions that homeowners have taken for granted.


  1. avatar paul beisler
    Posted January 19, 2018 at 12:23 pm | Permalink

    thank you-very helpful

    • avatar Paul Begemann
      Posted January 24, 2018 at 4:35 pm | Permalink

      You’re welcome Paul – Glad to help!

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