As I've been working on our taxes, and with the new higher standard deduction, we don't have enough deductions to actually itemize.
It's kind of bizarre to think about. After I added up our charitable donations, our property tax payments, and our mortgage insurance (our big three), we only have $20,560 in deductions and the standard deduction is $24,000.00
So being a homeowner, no longer gives us a federal tax break.
I know we live in a high cost of living area, and choose not to over extend ourselves financially in terms of housing (we did put 50% down, on our current abode)... but i'm wondering how many others this will effect... and if it will change the way they look at how much they owe and their overall debts.
A $155,000 mortgage is fairly normal for other parts of the country, or even a state or two away... and now that mortgage interest might not be deductible.
I wonder if people will stop taking out home equity lines of credit to pay off debt anymore, cause they won't get the tax "deductions" ... Maybe people will start to pay down there homes and treat the debt like actual debt instead of calling it "good debt."
Just some food for thought for today.
Since we won't be itemizing on our federal return, I won't be adding a "tax savings" portion to our total condo costs.... But I will get to for the state. Apparently we will still be itemizing our state deductions!
I did the math (AKA, looked over the returns and re-did the tax tables without our home info in there) and i'll be subtracting $594.60 from our "in the hole amount" for what we saved writing off the property taxes and our mortgage interest.
Are any of you going from itemizing to the standard deduction this year?
We had the same problems only we live in Washington and don't have state taxes. We still get a modest refund as our youngest is 16 but next year /sigh I can't imagine what it will be like. Glad to see you back to posting..
ReplyDeleteSorry to hear you guys are in the same boat. I'm glad to be back to posting too. I always miss the blog when I don't update it. Hub's doesn't always like to sit through my money brain dumps and this gives me a good place to splat it all out, lol. Do you guys get hit with a lot of service taxes since you don't have income tax on the state side?
DeleteNo, surprisingly we don't, We can deduct our local taxes which doesn't include food, but if you buy a big expense item and pay taxes it can help. We pay 8.7% for everything we buy except food. I'm the same way though with budget stuff my hubby just has the blank stare when we do ours. He always tells people I'm a spreadsheet nerd. Again great to see you back..
DeleteThat would give me motivation to save every receipt.... Washington sounds nice. We have a 7.75% tax on everything but food.... but you can either deduct state income and property taxes.... OR sales tax.... I think its weird you can't write off both if you have receipts because it was taxed...
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