Page 72 - Family Law Services

• Includes state, local and foreign income taxes

• State and local sales tax (in lieu of income tax)

• State and local real property tax

• State and local personal property tax

• GST tax imposed on income distributions

Interest on personal residence mortgage. The itemized deduction for home mortgage interest is tempo-
rarily limited under TCJA to interest on acquisition debt for tax years beginning after 12/31/17 and be-
fore 1/1/26 (Act Sec 11043). The limitation is reduced from $1,000,000 to $750,000 ($375,000 MFS)
for any acquisition debt incurred after 12/15/17. The definition of acquisition indebtedness is debt in-
curred in acquiring, constructing, or substantially improving any qualified residence of the taxpayer and
is secured by that qualified residence; or refinanced debt that meets these requirements. Generally, the
refinancing of debt will be treated as incurred on the date the original debt was incurred, providing the
new refinanced debt does not exceed the amount of debt refinanced. For a second home, the final ver-
sion of the law retains the acquisition indebtedness for a second home. If a taxpayer owns more than two
residences, he/she must select only one second home each year for the deduction.

Acquisition debt inside a home equity loan is addressed in IRC 163(h)(3)(C). The term "home equity in-
debtedness" means any indebtedness (other than acquisition indebtedness) secured by a qualified resi-
dence to the extent the aggregate amount of such indebtedness does not exceed:

(I) the fair market value of such qualified residence, reduced by

(II) the amount of acquisition indebtedness with respect to such residence

Residential mortgage interest is deductible only if the mortgage is properly secured and collateralized.

Cash Contributions. The new law extends the limit for cash contributions to public charities from 50%
to 60% of the contribution base for years beginning after 12/31/17 and before 1/1/26 (Act Sec 11023).
Charitable deductions are no longer allowed for any payment to a college or university in exchange for
which the payer receives the right to purchase tickets or seating at an athletic event (Sec170(I)). Quali-
fied charitable distributions from IRAs up to $100,000 per year to eligible organizations was retained
(Sec 408(d)(8)(A)).

Miscellaneous Itemized Deductions. TCJA temporarily repeals ALL miscellaneous itemized deductions
subject to the 2% AGI floor, including (but not limited to):

• Unreimbursed employee business expenses (including home office)

• Investment expenses (that is, broker fees)

• Trust administration expenses

• Tax preparation fees

• Hobby expenses

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