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Washington State Tax Write Offs for Home Owners and Tax Strategies for 2018

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The 2017 Tax Cuts and Jobs Bill passed by Congress will definitely have some impact on Washington State homeowners. For one, there is a cap on the amount that can be deducted on interest for mortgage loans, the amount is now loans up to $750,000 (down from $1m).

This will be felt the most in the Seattle area market due to the high prices of homes there as well as Bellevue. This is limited to new loans and those whose loans predate the tax bill are “grandfathered in“ at their original deductions.

By Tom Brennan, Copyright © 2022,
Previously the interest from home equity loans up to $100,000 was deductible. Now this deduction is allowed only where the loan was applied to home improvements. But the news is not so bad after all. Estate tax rates which double exemptions will be a relief in overall financial planning for some, and the tight market and high prices of existing homes will mean essentially a levelling off of taxes and property values.

Washington has no income tax, and the tax bill limits deductions for state and local taxes to a cap of $10,000. But the standard deduction has been doubled from $12,000 for individuals and $24,000 for married couples. Depending on your local tax rates it will be up to the filer to decide which is more beneficial. The idea behind this is that those States which do have high deductions for State and, local taxes are passing on expenses to those which do not have State income tax, this an attempt to relieve the tax burden on those States. Increased funding for local education will also affect tax bills and deduction eligibility in Washington counties.

Home offices are still eligible for deductions. Refinancing your mortgage is also an excellent option before interest rates increase. If you have children or are having a baby in 2018 you have some serious tax deductions to add for your benefit.

However, the silver lining is still being discovered. Many have seen not only pay increases and bonuses as businesses and corporations see tax relief, but can look forward to even better pay and benefits in the year to come as the economy is on a surge to an over 3% growth. Much of Washington’s business sector will see increased profits Basically the overall tax picture for homeowners has definitely changed, but a general levelling out seems to be the end result for many. The promising economic growth in the coming year may be the game changer.

Seeking the best advice on taxes is always a good strategy. Keep diligence and accurate records of all financial transactions that could be used in tax situations. Keep hardcopies of items done online and a duplicate set as well. The new tax and jobs law offer both change and opportunities to those who do their homework.e
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