“Under the bill, homeowners who purchased a house before Dec. So California homeowners with mortgages loans that were originated before this change should not be affected by it.Īccording to a CNBC article from December 20: (And it’s over $1 million in some markets.) These are the areas where home buyers could be affected most.īut again, the old deduction limit is grandfathered for existing home loans. But across the San Francisco Bay Area, the median price was around $893,000. That’s becomes properties in the Bay Area are more expensive, and many are priced well above the (revised) mortgage interest deduction limit for 2018.Īccording to Zillow, the median home value for the state as a whole was $519,100, as of November 2017. Many Bay Area home buyers will be affected by this change in the tax code, more so than the rest of California. Bay Area Homeowners Could Be Affected Most In more affordable areas, this change will have less of an impact and affect fewer homeowners. This part of the tax cut bill could affect quite a few homeowners in the state, particularly those who own properties in the more expensive real estate markets like the Bay Area and some parts of Southern California. But the old limit of $1 million is being grandfathered, which means that those California homeowners who purchased before the new law took effect could still deduct the higher amount. Mortgage Interest Deduction Limits for CaliforniaĪmong other things, this comprehensive bill will lower the allowable mortgage interest deduction for newly purchased homes in California, from an original cap of $1 million to a new cap of $750,000. The standard deduction has been roughly doubled.State and local property, sales and income tax deductions are capped at $10,000.The mortgage interest deduction cap is being lowered to $750,000.In 2018, the limit will drop to $750,000 - down from the previous cap of $1 million.Ī summary of changes under the tax cut bill: Among other things, this tax policy reform will reduce the the mortgage interest deduction limit for California homeowners. Last month, President Trump signed the Tax Cuts and Jobs Act, a comprehensive bill created by Republicans in Congress. The bad news is that some of these deductions are getting smaller. As a result, homeowners are always looking for a break when it comes to property taxes, mortgage interest, and other tax-related deductions. Here’s what you need to know about these tax code changes for 2018.Ĭalifornia is notorious for having expensive real estate markets. Summary: The president recently signed into law a tax bill that will lower the mortgage interest deduction limit in California.

California dissomaster 2019