The new proposed tax law changes are being discussed by the Senate. This article discusses how this may have a bigger impact on your life than you might think says, William D King.
The proposed changes would take away mortgage interest deduction, decrease child tax credit to $1000, and increase state & local taxes if they were deductible. It would also change capital gains rules for real estate sales.
Some things that are being considered include taking away mortgage interest deduction (which could make it harder for people to buy homes). Another thing is lowering the number of money parents can claim for their children’s tax credit (this could hurt families with many children or children in private school). Another big concern is the removal of SALT (state and local tax) deductions (this could be unfair to those people who would have to pay higher taxes). William D King says the proposed changes also take away the ability for real estate sales to qualify as capital gains which means you would not be able to deduct your losses (this is a big concern for owners of commercial property like shopping malls and hotels).
The reason why these changes are being discussed is that they will help simplify the tax code and make it “fair.” They claim this will benefit everyone—keeping more money in citizens’ pockets.
The outcome of these changes is still uncertain, but they could have a big impact on your life. It is important to know all the facts before making any decisions in terms of finances or business.
Impacts of new proposed tax law changes:
Mortgage interest deduction:
The new proposal would make it harder to buy a home by taking away the mortgage interest deduction. Homeowners use the money they save from this deduction to fund repairs or renovations, pay for tuition or certain medical procedures, and put a down payment on their next house. This could present a big problem as many people rely on the savings from this deduction when purchasing a home explains William D King. It makes homeownership attainable for median income earners who can’t afford high-priced homes.
Parents’ tax credit:
A major concern is that parents would have less of an incentive to have children if they aren’t able to claim child tax credits for more than two children less than 17 years old the previous law allowed them to claim for children under 17 years old. This would be a big problem as the United States population is steadily climbing. There are concerns that this new change could impact fertility rates which have been on a decline over the past few decades.
State and local tax deductions:
A state sales tax deduction of up to $10,000 will also be eliminated if this passes. Property taxes were already capped at $10,000 per year by the previous law if they were itemized deductions, but now it won’t matter how much money you make or how many properties you own—you will not qualify for the deduction without putting in extra effort first. Many people use this deduction to pay health insurance premiums and other deductible expenses like medicine and medical equipment. It also encourages people to give to charity by reducing state tax burdens.
Real estate sales would no longer qualify for capital gains treatment if this passes through. This means that any losses you incur while selling real estate could not be deducted from your total income. Which is the majority of profit taken in during these transactions says, William D King. This change will impact commercial property owners who rely on these deductions every year. It’s bringing up concerns over whether or not millennials will be able to afford to buy homes, especially considering 55% of them are renters.
These new tax law changes would affect people on both sides of the political spectrum. The outcome is still uncertain, but the proposal isn’t looking good for many Americans—especially middle and lower-class earners. Who will lose access to some financial resources like deductions and credits that they use to save money every year. This article discusses how these changes could impact you so it is important to be aware of your information sources. Before making any decisions about your finances or future career plans.
These changes are still uncertain, but they could definitely impact your life if passed. It is important to know all the facts before making any major decisions regarding finances and business.
– The mortgage interest deduction will make it harder for people to buy homes. Because it will be harder for median income earners who can’t afford high-priced homes.
– The parents’ tax credit under the new proposal would incentivize having fewer children. By only being able to claim a child tax credit for two children 17 years old or younger. This may impact fertility rates which have been on a decline over the past few decades.
– There would no longer be an incentive to donate to charity. Or pay health insurance premiums with state and local tax deductions. This would be a big financial loss for middle and low-income earners who rely on these deductions every year.
– Capital gains treatment will no longer apply to real estate sales. Which means that you couldn’t deduct losses from your total income if selling any properties. This change could discourage people from buying commercial property and millennials from buying homes since 55% of them are renters.