Individuals who are weighing the possibility of making new property purchases in the new year should make themselves aware of some important changes being put into effect with regard to the housing market as a result of the U.S.’s newly approved tax laws. Prospective home buyers should understand that any costs related to home properties should not comprise more than one third of one’s usable income. New home buyers in the new year will be able to receive deductions on interest related to mortgage payments, but they might encounter a ceiling on deductions able to be received for property taxes.
- You should never spend more than 30% of your total income on housing costs.
- If you own a modestly-priced home, you should still be able to deduct the interest on your mortgage.
- The $10,000 cap on property tax deductions will affect you more if you own a home in a state like New Jersey, where the property taxes are high.
“thanks to some key changes in the tax code, homeownership in some areas of the country has seemingly become less affordable overnight.”