Can I Claim the Mortgage Interest Deduction?
Like most homeowners over the past couple of years, you may have discovered that you can no longer write off your property taxes or claim the mortgage interest deduction.
That doesn't necessarily mean your taxes went up. The change is because the standard deduction nearly doubled starting in 2018, negating many homeowners' need to itemize their home-related expenses. Here's a roundup of the rules affecting homeowners.
Standard Deduction
The standard deduction is the amount everyone gets to claim whether they have actual deductions or not. It skyrocketed after the 2017 tax law changes, and has gone up again, incrementally, for tax year 2022. It's now $25,900 for married, joint-filing couples (up from $24,000 in tax year 2018). It's $19,400 for heads of household (up from $18,000). And $12,950 for singles (up from $12,000).
Many more people now find the standard deduction is higher than their itemizable write-offs. In fact, the proportion of homeowners who now find it advantageous to itemize their deductions (including mortgage interest and property taxes) under the new rules has fallen from about one in three to around one in 10.
"This doesn't necessarily mean that those who no longer itemize will pay more taxes," says Evan Liddiard, a CPA and director of federal tax policy for the National Association of REALTORS in Washington, D.C. "It just means that they'll no longer get a tax incentive for buying or owning a home."
So are you still itemizing, or are you now in standard deduction land? If the answer is standard deduction, you'll find that your tax forms are slightly simpler when you don't itemize, says Liddiard. But the trade-off is that our tax system no longer gives most homeowners a tax advantage over those who rent.Read more
