The National Association of Realtors (NAR) published a Tax Cuts and Jobs Act explainer for its members. It outlines the mostly negative, but also positive impacts the plan is expected to have on members and their clients. The explainer also highlights changes the NAR successfully lobbied for.

Changes include:

Mortgage Interest Deduction

• The final bill reduces the limit on deductible mortgage debt to $750,000 for new loans taken out after Dec. 14, 2017. Current loans of up to $1 million are grandfathered and are not subject to the new $750,000 cap. Neither limit is indexed for inflation.
• Homeowners may refinance mortgage debts existing on Dec. 14, 2017 up to $1 million and still deduct the interest, so long as the new loan does not exceed the amount of the mortgage being refinanced.
• The final bill repeals the deduction for interest paid on home equity debt through Dec. 31, 2025. Interest is still deductible on home equity loans (or second mortgages) if the proceeds are used to substantially improve the residence.
• Interest remains deductible on second homes, but subject to the $1 million/$750,000 limits.

Deduction for State and Local Taxes

• The final bill allows an itemized deduction of up to $10,000 for the total of state and local property taxes and income or sales taxes. This $10,000 limit applies for both single and married filers and is not indexed for inflation.
• The final bill also specifically precludes the deduction of 2018 state and local income taxes prepaid in 2017.

Standard Deduction

• The final bill provides a standard deduction of $12,000 for single individuals and $24,000 for joint returns. The new standard deduction is indexed for inflation.