Documents you will need to file:
- 1098 From Your Mortgage Lender
- Property Tax Bill for 2019
- Personal Property Tax Bill for 2019
Below are the highlighted areas that owning a home will affect on your return.
State withheld, property taxes deduction has been limited to how much can be deducted. It caps out at $10,000 under the terms of the TCJA. For example If you pay $6,500 in real estate/personal property taxes and $5,000 in state income taxes withholding from your paycheck for a total of $11,500, as of December 2019, you’ll lose $1,500 of that deduction. You can either claim $5,000 in property taxes and $5,000 in income taxes, but that other $1,500 for the full $11,500 you paid is no longer available.
Deduction for Home Mortgage Interest. This deduction has certainly changed, It’s more restricted now, but most taxpayers won’t feel the reduction. Only those who can afford rather large mortgages will be affected. You can now deduct interest acquisition loans topping out at $750,000, and you can no longer deduct interest on home equity loans.
The most significant change is the standard deduction vs. itemized deductions.
Taxpayers lost a handful of itemized deductions and other deductions have been limited. But the TCJA almost doubled the standard deduction for all filing statuses. It was changed from $6,350 to $12,000 for single taxpayers, from $12,700 to $24,000 for married taxpayers who file jointly, and from $9,350 to $18,000 for those who qualify to file as head of household. So while your available itemized deductions might shrink, your available standard deduction will mushroom, potentially offsetting these lost deductions.