What you should know about the new tax law P6

Part 6: Homeowners

1. THE Tax Cut and Jobs Act reduces the maximum amount of mortgage debt to acquire a first or second residence for which you can claim itemized interest expense deductions from loans of $1 million

($500,000 for married filing separately) to $750,000 ($375,000 for married filing separately).

2. Current homeowners will not be affected by the lower loan cap.

3. The Act eliminates old law rule that allowed interest deductions on up to $100,000 of home equity loan.

4. Old law loan limits of $1 million/$500,000 continue to apply to home acquisition mortgages that were taken out under the old law rules and refinanced after this year (as long as the refinanced loan principal doesn’t exceed the old loan balance at the time of refinancing).

5. This change doesn’t affect home acquisition mortgages taken out under binding contracts in effect before Dec. 16, 2017 as long as the purchase escrow closes by March 31, 2018.

6. You can still exclude up to $500,000 ($250,000 for single filers) from capital gains on the sale of your primary home (as long as you lived there for two of the past five years).

7. The new law gives us fewer reasons to itemize. We itemize to save taxes via mortgage and property taxes, but with limited mortgage deductions and doubled standard deduction, we expect less taxpayers to use itemized deductions and more to use standard deductions.

8. The ability to deduct mortgage interest has historically encouraged taxpayers to buy homes.

9. The real estate industry is concerned that the new limits could keep people from selling their homes and squeeze the current tight supply of housing.

10. Current homeowners might hesitate to trade up to a more expensive house if the price tag is too high to take full advantage of the deduction. The Act will also exert downward pressure on prices.


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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California. 

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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies.  He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at vicsy@live.com.

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