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How would homeowners fare under the proposed tax law?
The Tax Cuts and Jobs Act would make several changes. For example, it retains the mortgage interest deduction (subject to a $1 million cap) for mortgages that already exist on Nov. 2, 2017, as well as for those who entered into a binding written contract before that date. However, for newly purchased homes, the deduction would be limited to $500,000 and taxpayers would be limited to one qualified residence. The bill would also retain the property tax deduction, subject to a $10,000 maximum.
A vision for “transformational” tax reform
In a recent speech to the National Association of Manufacturers, House Speaker Paul Ryan urged Republicans to seize this “historic opportunity” to enact meaningful tax reform. With few details, he listed goals that included a simplified tax code, lower tax rates, improved global competitiveness for American businesses, elimination of special interest carveouts and permanent changes that give businesses certainty to plan for the future. Ryan projected that a realistic timeline for tax reform would be the end of 2017.
Raffensperger, Martin & Finkenbiner will continue to follow the potential tax reform. In truth, many of us thought the bill would be law by now, and the rates and changes would have been retroactive to January 1, 2017. Based on the timeframe, we anticipate that any changes would not be law until January 1, 2018.
As of now, that makes proactive tax planning a little more challenging as what’s good this year may be altered in the future. However, we will continue to recommend options and new ideas that provide immediate benefit. We will still look at long-term plans but will be more conservative in our recommendations depending on the situation and circumstance.
Proposed bill would freeze IRS funding at 2016 level
After the passage of a Continuing Resolution on April 28 that funds the government for an additional week, Congress has turned its attention to the Consolidated Appropriations Act of 2017, which would fund the government through the fiscal year. The bill provides $11.2 billion for the IRS — freezing agency funding at the fiscal year 2016 enacted level. Among other IRS-related prohibitions, the bill forbids proposed regs related to political activities and the tax-exempt status of Sec. 501(c)(4) organizations.
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