I am not infallible. I have been known to make a mistake every once in a while. We all do at some time. But the trick is to learn from your mistakes and not repeat them. I tell that to my grandchildren all of the time. I say that it is okay to make a mistake. But you need to learn from it. And you need to learn from it and not make the same mistake again.
But yes, I did make a mistake on a previous post. And I asked my readers that if I was wrong, that they should correct me. And, so far, nobody has.
Here is the mistake that I made. It was regarding the mortgage interest deduction. Currently, we are allowed to deduct all of our mortgage interest from our taxes. The proposed new tax plan will be putting a limit on how much we are allowed to deduct. And the limit is being placed at $500,000.
Now, before we go any further, let me state that I am a Realtor. I am not a tax professional. And I am not a financial advisor. And if anyone decides to use my financial advice, do so at your own risk. Please check with your own financial advisors and tax professionals.
The way that I read the changes in the tax bill is that you can only deduct up to $500,000. Now I did not think this made much difference, since in order to generate $500,000 in interest, you would need a mortgage of around $20 million dollars. And my feeling is, if you can afford a mortgage of $20 million dollars, capping your interest deduction should not have a big effect on your finances.
Upon further research, I see that the interest deduction is capped at $500,000. But this means that you can only deduct the interest on the first $500,000 of your mortgage. If your mortgage amount is $700,000, you can only deduct the interest on $500,000, not on the full amount.
I hope this clears things up.
If you would like to read the previous blog post, it can be found at my web site, www.55plusinmonmouth.com . Or call me, Art Reiman – Realtor, at 732-598-7700