State & Local Taxes
This category of itemized deductions includes amounts paid for state and local income tax, sales tax, and property tax. This includes such items as sales tax paid for a new car or boat, RTA tax paid with your car tab renewal, and real estate tax paid on your primary and second homes.
Under the new law, only $10,000 of combined income, sales, and property taxes are deductible. Watch out - if you live in high-tax cities and states, your deduction may be limited!
Home Mortgage Interest Deduction
The amount of mortgage interest you can deduct is based on the total amount of your mortgage debt (primary residence and second home combined including all mortgages). For 2017, this amount was $1 million. For 2018, this amount decreases to $750,000. Don't panic yet you may still be eligible under the $1-million rule if:
- You purchased your home prior to the end of 2017.
- You purchased a home in 2018, but had a written contract in place by Dec. 15, 2017, and the purchase was finalized by April 1, 2018.
- You refinanced your current home and the new loan does not exceed the principal balance of the old loan at the time of refinancing.