Since the passing of the Tax Cuts and Jobs Act of 2017 , many Orlando-Area homeowners are wondering how this will affect them. We were curious too and so we did a little bit of research so you don’t have to :).
First, the good news.
You are probably going to get a tax cut!! Hooray! The new distribution over (7) brackets and doubling of the standard deduction ($12K for single filers, $24K for joint filers) should get most of us a tax break. Also…if you itemized before you might not tomorrow (2018) as the standard deduction may prove less tax for you.
Next, if you are a snowbird…
and your primary residence is located in let’s say New York, New Jersey or Connecticut you might not be smiling and it may be a good time to make the leap to Florida and here is why…In the past all of us were able to write-off our State and Local property taxes, in full. This was a great benefit to people that lived in heavily taxed states like those previously mentioned and less of a benefit to to those living in states like Florida, Georgia or Alabama. In fact, you might say that residents living in states with less State and Local tax burden were not getting a benefit that those in California, New Jersey, New York and Connecticut were getting, due to the disparity in taxation.
In 2018, the maximum deduction will be $10,000.00 . To most Floridians, this more than covers property taxes. However, in the more heavily taxed states, the residents are in for a big hit!! It is not uncommon for a resident of Manhattan to pay in excess of $30,000.00 in State and Local taxes for a very small residence. A 2500 square foot house in Northern NJ might me taxed at $13,000.00 . Any way you slice, this will be a burden to many in those states, Middle and Upper Middle Class.
The third and last major change…
The last major change (that we see)affecting those living in the Greater Orlando Area is the Mortgage Interest Cap. In the past, the ability to write-off your mortgage interest was capped to mortgages in the amount of $1,000,000.00 . In 2018, this cap will be reduced to mortgages $750,000.00 and less(should have been dropped to $500,000 in our opinion). To most Floridians this is of no consequence. However, those living in affluent towns like Lake Nona, Windermere, Dr. Phillips, Lake Mary etc… might not be too happy.
In our opinion, Floridians should take a wait and see approach to the Tax Cuts and Jobs Act of 2017. In many cases (IE: Obamcare) the affects of a major bill are unknown for some time. In the mean time enjoy your tax-cuts and use the recent surge in job-opportunities to better your position in life.
Have a an opinion? Please post a comment. Furthering the discussion helps all of us!!