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Mortgage Interest

Mortgage Interest, Charitable Contributions, and Medical Expense

These three deductions are still remaining, but there have been slight modification made to each.

* The mortgage interest deduction can only be taken on mortgage debt of up to $750,000, down from $1 million currently. This only applies to mortgages taken after Dec. 15, 2017; pre-existing mortgages are grandfathered in. And the interest on home equity debt can no longer be deducted at all, whereas up to $100,000 in home equity debt could be considered.

* The charitable contribution deduction stays almost the same, but with two notable changes. First, taxpayers can deduct donations of as much as 60% of their income, up from a 50% cap in 2017. However, donations made to a college in exchange for the right to purchase athletic tickets will no longer be deductible.

* The threshold for the medical expenses deduction has been reduced from 10% of adjusted gross income (AGI) to 7.5% of AGI. In other words, if your adjusted gross income is $50,000, you can now deduct any unreimbursed medical expenses over $3,750, not $5,000 as set by prior tax law. Unlike most other provisions in the bill, this is retroactive to the 2017 tax year.

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Written by:
Ela Erickson
Published on:
February 28, 2020
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Categories: Tax LawTags: 2018 Tax Law Changes

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