09-30-2024, 12:39 PM
4 Ways Homeowners Benefit If The Trump Tax Plan Expires
David Rae
Contributor
David Rae is a gay Financial Planner, president DRM Wealth Management.
Follow
Click to save this article.
You'll be asked to sign into your Forbes account.
Got it
0
Jul 25, 2024,03:59pm EDT
Los Angeles Population Growth Continues At Torrid Pace
Will you benefit as a homeowner when the Trump tax [+]
plan expires?
GETTY IMAGES
Without action from Congress, there will be a slew of tax changes for all Americans at the end of 2025, regardless of who is elected President in November. Many provisions of the Tax Cuts and Jobs Act (aka the Trump Tax Plan) will expire. Four of these expirations could help many homeowners.
While December 31, 2025, may seem lightyears away, homeowners need to be aware of the potential changes that are coming in terms of tax planning. If you already own a home, you could see renewed tax savings if the TCJA is allowed to expire. For aspiring homeowners, your dream home may become a bit more affordable if the tax benefits of homeownership revert to their pre-Trump levels.
Closeup of purple and blue calibrachoa petunia flowers basket hanging on fence by colorful building house entrance and nobody on sidewalk in New Orleans, USA
If the TCJA expires you would be able to deduct [+]
the full amount you pay in property taxes each year.
GETTY
Increased Property Tax Deduction
The Trump Tax Plan was rough on homeowners in areas with a high cost of living. The TCJA of 2017 limited the amount of state and local taxes (SALT) that a person could deduct at just $10,000. This number has not been indexed for inflation, meaning it has been less valuable over time. There is also no distinction between those filing single or married and those filing jointly. In plain English, two individuals would be entitled to $20,000 in total SALT deductions. A married couple would be entitled to just $10,000 in SALT deductions.
SALT deductions are significant to high-income individuals in high-tax states like California or New York. The SALT cap also limits the deductions for property taxes, which means higher taxes for many homeowners in states without an income tax, like Florida, Nevada and Texas.
It does not take a high home value to generate $10,000 or more in property taxes. Property taxes are pretty high in Texas, and you could hit the $10,000 SALT cap with a home that costs just $565,000. This assumes no other state and local taxes on your income.
If you buy a home in California, you will hit the SALT cap in property taxes alone with an $800,000 home. Of course, with California’s progressive tax system, you would likely hit the SALT cap with a more modest house, assuming you had an income to pay the mortgage and taxes on your home. I must also point out that the median listing home price in Los Angeles County was $1 million in June 2024, according to Realtor.com.
As a Los Angeles-based financial planner, I hope this annoying part of the Trump Tax Plan will expire. This will help many of my friends and clients take the full tax deduction for all of the state and local taxes they pay.
David Rae
Contributor
David Rae is a gay Financial Planner, president DRM Wealth Management.
Follow
Click to save this article.
You'll be asked to sign into your Forbes account.
Got it
0
Jul 25, 2024,03:59pm EDT
Los Angeles Population Growth Continues At Torrid Pace
Will you benefit as a homeowner when the Trump tax [+]
plan expires?
GETTY IMAGES
Without action from Congress, there will be a slew of tax changes for all Americans at the end of 2025, regardless of who is elected President in November. Many provisions of the Tax Cuts and Jobs Act (aka the Trump Tax Plan) will expire. Four of these expirations could help many homeowners.
While December 31, 2025, may seem lightyears away, homeowners need to be aware of the potential changes that are coming in terms of tax planning. If you already own a home, you could see renewed tax savings if the TCJA is allowed to expire. For aspiring homeowners, your dream home may become a bit more affordable if the tax benefits of homeownership revert to their pre-Trump levels.
Closeup of purple and blue calibrachoa petunia flowers basket hanging on fence by colorful building house entrance and nobody on sidewalk in New Orleans, USA
If the TCJA expires you would be able to deduct [+]
the full amount you pay in property taxes each year.
GETTY
Increased Property Tax Deduction
The Trump Tax Plan was rough on homeowners in areas with a high cost of living. The TCJA of 2017 limited the amount of state and local taxes (SALT) that a person could deduct at just $10,000. This number has not been indexed for inflation, meaning it has been less valuable over time. There is also no distinction between those filing single or married and those filing jointly. In plain English, two individuals would be entitled to $20,000 in total SALT deductions. A married couple would be entitled to just $10,000 in SALT deductions.
SALT deductions are significant to high-income individuals in high-tax states like California or New York. The SALT cap also limits the deductions for property taxes, which means higher taxes for many homeowners in states without an income tax, like Florida, Nevada and Texas.
It does not take a high home value to generate $10,000 or more in property taxes. Property taxes are pretty high in Texas, and you could hit the $10,000 SALT cap with a home that costs just $565,000. This assumes no other state and local taxes on your income.
If you buy a home in California, you will hit the SALT cap in property taxes alone with an $800,000 home. Of course, with California’s progressive tax system, you would likely hit the SALT cap with a more modest house, assuming you had an income to pay the mortgage and taxes on your home. I must also point out that the median listing home price in Los Angeles County was $1 million in June 2024, according to Realtor.com.
As a Los Angeles-based financial planner, I hope this annoying part of the Trump Tax Plan will expire. This will help many of my friends and clients take the full tax deduction for all of the state and local taxes they pay.
![[Image: X3jxfid.jpeg]](https://i.imgur.com/X3jxfid.jpeg)