As the end of 2025 approaches, homeowners need to be aware of potential tax changes that may be coming regardless of who is elected President in November. Several provisions of the Tax Cuts and Jobs Act (TCJA), also known as the Trump Tax Plan, are set to expire. These changes could significantly impact homeowners, both current and aspiring. One of the key changes that may help homeowners is the expiration of the SALT deductions, which limited the amount of state and local taxes that could be deducted, negatively affecting homeowners in high-cost areas.
The SALT deductions are particularly important for high-income individuals in states with high taxes, such as California and New York. The cap on these deductions has also limited the deductions for property taxes, resulting in higher taxes for many homeowners in states without an income tax, such as Florida, Nevada, and Texas. Even homes of moderate value in these states could hit the $10,000 SALT cap, significantly impacting homeowners’ tax liabilities. As home prices continue to rise, more homeowners are likely to be affected by these limits on deductions.
Another key change that may benefit homeowners is the increase in the mortgage interest deduction back to $1 million, up from the current limit of $750,000. This change could benefit homeowners with larger mortgages, especially in the current housing market, where many homes are priced at or above $750,000. Additionally, the potential return of the moving expense deduction could be beneficial for those who relocate for work, providing tax relief for the costs associated with moving. The home office deduction, which was not available to many W-2 workers during the COVID pandemic, may also become more beneficial if the previous rules are reinstated.
While tax benefits should not be the sole reason for purchasing a home, they can certainly add value to the investment in the long run. As the tax landscape continues to evolve, homeowners should stay informed about potential changes that may affect their tax planning. Regardless of the outcome of the upcoming presidential election, changes to the tax system are expected, and homeowners should be prepared to adjust their financial plans accordingly. Overall, the expiration of certain provisions of the TCJA could provide renewed tax savings for homeowners, making homeownership more affordable and rewarding in the future.
