Generally those who own their home in cities have higher property tax bills. Prior to the TCJA, there wasn’t a dollar cap on your real estate tax deduction if you itemized. Now there is a $10k cap which includes your state taxes paid (like from your w2 or estimated taxes). For someone like me who lives in a somewhat low COL area…no biggie. My property taxes are pretty low and don’t come near that cap. But it’s pretty easy to hit that cap when you live in a city and your property taxes alone are 10k or more…but before that u also were able to deduct your state taxes paid. So many people who previously were able to itemize and even might be able to now if they got the full amount of property taxes, will only get the standard decision and thus more of their income is taxable.
There are sources that say that the property tax deduction primarily benefited higher income earners, but some of these higher income earners also live in higher COL areas and thus don’t make as much money as it may seem because it’s so much more expensive to live where they live.
Now there is a $10k cap which includes your state taxes paid
I figured there was something I was missing and I think thats it.
Fwiw, I really appreciate the long-ish form response. I feel most others were content to downvote and move on, but I feel I’ve learned something that I wasn’t otherwise motivated to go learn on my own.
It’s my profession and I’m a little bit of a nut about it (in that I like the job, haha) plus many people do not understand taxes - nor should they because it’s been made SOOO unnecessarily complicated. So I’m always happy to try and explain our ridiculous system, lol. Thanks for reading it!
You could do that before Trump’s 2017 Tax Cuts And Jobs Act. They capped it to punish citydwellers, which are majority Democrat.
How is that punishing to city dwellers?
I get that it rewards non-city dwellers more than people who live in cities, but is that really the same thing?
Generally those who own their home in cities have higher property tax bills. Prior to the TCJA, there wasn’t a dollar cap on your real estate tax deduction if you itemized. Now there is a $10k cap which includes your state taxes paid (like from your w2 or estimated taxes). For someone like me who lives in a somewhat low COL area…no biggie. My property taxes are pretty low and don’t come near that cap. But it’s pretty easy to hit that cap when you live in a city and your property taxes alone are 10k or more…but before that u also were able to deduct your state taxes paid. So many people who previously were able to itemize and even might be able to now if they got the full amount of property taxes, will only get the standard decision and thus more of their income is taxable.
There are sources that say that the property tax deduction primarily benefited higher income earners, but some of these higher income earners also live in higher COL areas and thus don’t make as much money as it may seem because it’s so much more expensive to live where they live.
I figured there was something I was missing and I think thats it.
Fwiw, I really appreciate the long-ish form response. I feel most others were content to downvote and move on, but I feel I’ve learned something that I wasn’t otherwise motivated to go learn on my own.
Screw you how dare you be civil on social media
It’s my profession and I’m a little bit of a nut about it (in that I like the job, haha) plus many people do not understand taxes - nor should they because it’s been made SOOO unnecessarily complicated. So I’m always happy to try and explain our ridiculous system, lol. Thanks for reading it!
Property in the city is worth more