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2019 Tax Filing Tips for Homeowners

What to know when filing your tax return this year…

 

2019 Tax Return Tips for Homeowners

 

The Tax Cuts and Jobs Act of 2017 was signed into law in late December of 2017.  This tax reform bill is the most significant tax change in the United States in over 30 years.  As the 2019 tax filing season is in full swing, take a few minutes to educate yourself on what has changed, and how it will impact your tax return.

From new tax brackets to changes in deductions and credits, there’s a lot of new information to absorb. Here are some helpful tips for homeowners on these tax changes and how they may impact your return.

Standard Deduction Changes

One of the biggest changes brought on by theTax Cuts and Jobs Act is with the standard deduction, which has nearly doubled. A “tax deduction” is any item that can reduce your taxable income. According to the Motley Fool, “Before the increase, about 70% of U.S. households used the standard deduction, but now it is estimated that roughly 95% of households will use it.” This means that unless your itemized deductions exceed the standard deduction, you should stick with the standard deduction.

Here are the standard deduction amounts for the 2018 and 2019 tax years:

Standard Tax Deduction 2018

Mortgage Interest

Yes, the mortgage interest deduction still exists under the Tax Cuts and Jobs Act, but there’s a chance it may not be as valuable as it was before.

Homeowners are allowed to deduct the interest they pay on as much as $750,000 of qualified personal residence debt on a first and/or second home.  This has been reduced from the former limit of $1 million in mortgage principal plus up to $100,000 in home equity debt.

The Motley Fool notes that “the deduction for interest on home equity debt has technically been eliminated for the 2018 tax year and beyond.  However, if the home equity loan was used to substantially improve the home, the debt is considered a qualified residence loan and can, therefore, be included in the $750,000 cap.”

 

State Income Tax or State Sales Tax

The IRS gives taxpayers the choice to claim either their state and local income tax or their state and local sales tax as an itemized deduction.  Naturally, if your state doesn’t have an income tax, the sales tax deduction is the way to go.  On the other hand, if your state does have an income tax, then deducting that will generally save you more money than deducting sales tax.

Tennessee has no income tax, but does have a “hall tax” — that is, a 6% tax on interest and dividends, which is specifically allowed by the state constitution.  Tennessee also has a minimum sales tax of 7% but can be as high as 10% depending on the county (i.e. Knox County is 9.25%). 

Use the IRS calculator to help easily determine your sales tax deduction, as you do not necessarily need to retain every single receipt from the year.

 

Capital Gains

There is good news for those of you who sold your primary residence in 2018 and owned it for at least 2 of the last 5 years.  You are exempt from paying capitals gains if the net gain was less than $250,000 (single) or $500,000 (married & filing jointly)!  Check out the article for more details…  

 

Property Taxes

Property taxes paid on homes, cars, boats, airplanes or other personal property can be counted towards itemized deductions.  This deduction and the deduction for income or sales tax are collectively known as the SALT deduction — that is, the “state and local taxes” deduction.

The Tax Cuts and Jobs Act limits the total amount of state and local taxes you can deduct — including property taxes and sales/income tax — to $10,000 per year.  So if you live in a high-tax state or simply own some valuable property that you pay tax on, this could significantly limit your ability to deduct these expenses.

Tax Brackets

The Tax Cuts and Jobs Act also updates tax brackets. Here’s a look at what’s shifted, courtesy of H&R Block:

Tax Brackets 2018

 

Overall, the actual numbers inside of these ranges have shifted. The tax brackets for 2018 are slightly broader, and rates are slightly lower. H&R Block notes that the new tax brackets mean that most taxpayers will pay less tax.  That said, we always urge our clients to speak with an accountant to get a full understanding of their options for capital gains before filing their tax returns.

For the bigger picture and everything that has changed with the Tax Cuts and Jobs Act, we recommend a deeper dive into any of these helpful articles:

https://www.fool.com/taxes/2019/01/13/your-2019-guide-to-tax-deductions.aspx

https://finance.yahoo.com/news/2019-guide-tax-deductions-155000172.html

https://www.hrblock.com/tax-center/irs/tax-reform/new-tax-brackets/

Posted in: 2018 Tax Return Tagged: capital gains taxes real estate, filing taxes, real estate taxes, sales tax tennessee, state income tax tennessee, tax cuts and jobs act

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Holli McCray Home Marketing Group is in Sevierville, Tennessee.

10 hours ago

Holli McCray Home Marketing Group

PRICE REDUCED TO $192,500
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​Learn more about this listing: search.hollimccraygroup.com/listing/1100854
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PRICE REDUCED TO $192,500
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​#sevierville
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Holli McCray Home Marketing Group is in Andersonville.

14 hours ago

Holli McCray Home Marketing Group

PRICE REDUCED TO $308,000
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​Learn more about this listing: search.hollimccraygroup.com/listing/1097382
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​#andersonville
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PRICE REDUCED TO $308,000
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​Learn more about this listing: https://search.hollimccraygroup.com/listing/1097382
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​#andersonville
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Holli McCray Home Marketing Group

17 hours ago

Holli McCray Home Marketing Group

Walk through one of our fabulous new listings with Martha Lavely Riordan! This 2-story home in Farragut offers a fantastic floor plan with 3 bedrooms and 2.5 bathrooms. Currently priced at $335,000...

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🏆Greater 𝓚𝓷𝓸𝔁𝓿𝓲𝓵𝓵𝓮'𝓼 Top Real Estate Team 🏠 | (833) 464-7653 | Holli McCray Home Marketing Group Keller Williams #knoxville #realestateagent

Instagram post 2197298954251584006_1543036673 Today we celebrate poinsettias, a plant native to Mexico, but a longtime favorite among Americans. Pro Tip: If you're looking for an easy way to decorate your home for the holidays, we highly recommend picking up a poinsettia or two. They are easy to care for, last long after Christmas, and provide that perfect pop of color. ​
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Instagram post 2195811605583811760_1543036673 NEW LISTING!!!
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​DESIRABLE FLOOR PLAN! Wonderful split-bedroom ranch with an open living area and unfinished basement that could be renovated into future living space. Highlights include a bright open eat-in kitchen, beautiful hardwood flooring, and a large walk-in closet in the master suite. The unfinished basement/garage makes a fantastic workshop and can accommodate up to 4 vehicles. Easy commute to Dandridge, Jefferson City, Morristown, and Sevierville! MLS# 1102471
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​$160,000
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Instagram post 2195404025191522561_1543036673 NEW LISTING!!!
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​SIMPLY CHARMING! This truly delightful home offers a well-designed open floor plan and is perfect as a primary residence or investment property. Features include a spacious open living area, warm neutral paint colors throughout, a huge walk-in closet in the master suite, tile flooring in the wet areas, and no stairs required to enter the home. Enjoy the outdoors from the relaxing fenced back patio. The Preserve offers many wonderful amenities that include a huge community pool with swimming lanes, playground, wellness center, clubhouse, walking trails, lake access, a boat dock, a full-service marina, and a new golf course coming in 2020. Very easy commute to downtown Oak Ridge and just 30 minutes from Knoxville! MLS# 1102468
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​$200,000
​3 Bedrooms
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​1,724 Sq Ft.
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#knoxrocks  Holli McCray Home Marketing Group Keller Williams | (833) 464-7653
Instagram post 2195375720669257808_1543036673 ❤️We believe the holiday season should be about giving back and giving thanks with gifts that come from the heart. And close to our heart is shopping local by supporting small businesses based right here in Knoxville.
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🎁Visit the #linkinbio now for our 2️⃣0️⃣1️⃣9️⃣ Knoxville Holiday Shopping Guide.
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👉Tag us @hollimccraygroup when you buy local gifts so we can see what everyone's into this holiday season!
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Instagram post 2195303661259830034_1543036673 🏡Looking for a new construction home? 2-story in #HardinValley features an elegant open living area, hand-scraped hickory hardwood flooring on the main level, high-end designer finishes throughout, a gorgeous open kitchen with a gas stove, 42-inch cabinets & granite countertops, tasteful paint colors throughout, and so much more!
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​🚗You'll love the #WestKnoxville location that is just minutes from area schools, I-40, Turkey Creek, Pellissippi Pkwy, and many great local restaurants. Easy commute to Downtown Knoxville or Oak Ridge!
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📍MLS# 1066198 in #Knoxville, TN. https://search.hollimccraygroup.com/listing/1066198
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Instagram post 2195286909830452856_1543036673 NEW LISTING!!! ​
​PRIME HARDIN VALLEY LOCATION! This delightful 2-story home offers a highly desirable floor plan with all 4 bedrooms on the same level. Highlights include a bright open eat-in kitchen with an island breakfast bar, a main level formal dining room & home office, a cozy fireplace (gas) & surround sound installed in the living room, beautiful trey ceilings, a soaking tub, and walk-in shower in the elegant master suite, a large bonus room (possible 5th bedroom) upstairs, and tasteful neutral paint colors throughout. Relax after a long day or entertain on the huge back patio. Fantastic West Knoxville location that is just minutes from area schools, I-40, Turkey Creek, Pellissippi Pkwy, and many great local restaurants. Easy commute to Downtown Knoxville or Oak Ridge! MLS# 1102464
​
​$340,000
​4 Bedrooms
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​2,867 Sq Ft.
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Instagram post 2194495830583636795_1543036673 The biggest of thank you’s to @audryefaye for these amazing flowers! ❤️❤️❤️Even though they’re off experiencing Europe, she and @__jamesmcleod__ took the time to send these to congratulate us for such an important milestone for HMG.  You guys are so great and we really appreciate you!  #hollimccrayhomemarketinggroup #knoxville #knoxvilletn #flowerstyle #flowers #farmgirlflowers #grateful #thankful
Instagram post 2192973918409811946_1543036673 Tonight is First Friday ArtWalk! From holiday shopping with local artists and listening to live music, to sipping and savoring local holiday treats, there's so much to do and see in downtown Knoxville. Bring the whole family or make it a date night! 🍺 🍷 🎵 🎨 ​
​📸 : @downtownknox
​#firstfriday #knoxville #downtown #artwalk #datenight #familyfun #knoxrocks #865life #downtownknoxville #knoxvillerealestate ​Holli McCray Home Marketing Group Keller Williams | (833) 464-7653
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Holli McCray Home Marketing Group Keller Williams
420 Bearden Road
Knoxville, TN 37919
Office: 833-464-7653
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