Naples+Illustrated+201812

106 NAPLES ILLUSTRATED

BALANCE

Beginning this year, taxpayers preparing their 2018 returns can take

advantage of the new law, formally known as the Tax Cuts and Jobs

Act. David Hasen, professor of law with expertise in taxation at Uni-

versity of Florida Levin College of Law, offers insight into some of the

most significant tax code revisions for individuals.

First, some basics: The standard deduction has nearly doubled, to

$24,000 for married filing jointly and $12,000 for single filers, meaning

fewer people will itemize, explains Hasen. But these higher amounts

are somewhat offset by the fact that the personal exemption (which

was a little more than $4,000 per person and could be taken regardless

of whether a taxpayer itemizes) is no longer available.

Income tax brackets have been lowered, with the top tax tier of 39.6

percent dropping to 37 percent. It applies to taxable income in excess

of $500,000 for single filers and $600,000 for married filing jointly. The

lowest bracket is 10 percent.

Now, let’s dive into some additional highlights of the tax reform.

PROPERTY

Interest on home acquisition debt—which includes the purchase,

refinance, or substantial improvement of a primary or secondary

property—was deductible up to $1 million under the old rules, says

Hasen. Going forward, the limit is $750,000 for married filing jointly

and $375,000 for single filers. Note that while the deduction can be ap-

plied to a primary or secondary residence, it isn’t a separate amount

for each but rather a combined total if applied to both properties.

When most of the new tax reform laws sunset on January 1, 2026, the

amount reverts to $1 million, unless Congress acts before then.

Interest on home equity loans, which was deductible up to

$100,000, is no longer available, unless used to substantially improve

the home.

State and local income and property tax can only be deducted up

to $10,000 a year for married filing jointly, says Hasen. That makes

the prospect of homeownership a lot less attractive, unless you live

Familiarize yourself with these tax reform changes before filing for 2018

THE TAX MAN

By Judy Martel

WEALTH