The tax questions about mortgages and homeownership start with the potential deduction for interest payments and extend into issues like investing, loans, retirement, politics and family.
Since clients' homes often represent their largest asset and means of building wealth, financial advisors and tax professionals field many queries from their customers on the potential strategies and guidelines for mortgages. A half dozen planners and tax experts helped Financial Planning compile the below list of 11 tips for clients who are buying or refinancing a home.
For the current time, and at least through the end of 2025, the Tax Cuts and Jobs Act slashed the amount of principal value that's eligible for an itemized mortgage interest deduction on a first or second home to $750,000 from $1 million and set a cap of only $10,000 on the exemptions for income, sales and property taxes from state and city governments. Those changes have dramatically reduced claims of those deductions, according to the nonpartisan, nonprofit Tax Foundation. The higher standard deduction from the law (in 2023, $27,700 for couples and $13,850 for individuals) cut eligibility for many deductions.
The prospect of itemization came up frequently in discussions with these six wealth management and tax professionals:
- Liting Chuang, the director of tax planning and an associate wealth advisor with the Seattle-area office of Bordeaux Wealth Advisors
- Steve Henderson, a regional director and partner with the Tulsa, Oklahoma-based office of Merit Financial Advisors
- James Bremis, a financial planner with Wakefield, Massachusetts-based Sentinel Group
- Frank Remund, a Beaverton, Oregon-based principal wealth manager with Savvy Advisors
- Adrienne Davis, a financial planner with Philadelphia-based Zenith Wealth Partners
- David Lesperance, a lawyer who's the principal of international tax and immigration advisory firm Lesperance & Associates
Scroll down the slideshow to see 11 tips on taxes, mortgages and homeownership. For a breakdown of the key tax-related questions relating to paying off student loans, click here. To view a list of two dozen tax tips for self-employed clients, follow this link.
