So here we are, in the early days of 2018. Just before we celebrated the New Year, In Washington DC, Republicans in Congress passed a new tax law, setting the stage for sweeping changes that will effect every taxpayer. According to financial analysts who have studied the new law, many people will see a reduction in their federal income taxes. While that sounds great (every penny counts, right?) the new law contains provisions that will result in offsetting increases in other living expenses – health insurance in particular.
But not everyone is thrilled by the new law. Homeowners in particular have little reason to cheer, because the new tax law limits the deductions that homeowners can take for their mortgage interest and property taxes. Homeowners never imagined this could happen, as these deductions were considered to be an important financial incentive for people to buy homes, as homeowners drive 70% of the US economy.
Homeowners are now limited to deducting only $10,000 in combined mortgage interest and state and local taxes on their federal tax returns. In many states, the amount of mortgage interest and property taxes far exceed $10,000, so homeowners in these states are “stuck” with the status quo. In the Northeast and West Coast in particular, homeowners will take a big hit, as the combined total of mortgage interest and property taxes (including school taxes) can easily exceed $25,000.
A typical homeowner in this situation can only deduct $10,000 of that $25,000, meaning that with the new tax law, they will have to pay federal taxes on $15,000 that was previously deductible. If they are in a 20% tax bracket, they will need to come up with an additional $3,000. These homeowners are understandably not happy. Their tax increase will more than offset the $1,000-$2,000 they were promised by those congressmen who passed the law.
Homeowners facing this new reality may be stuck, but there IS a way for homeowners facing big tax increases to still save money – a huge amount of money it turns out – by simply changing the way they pay their mortgage.
You may have heard that homeowners can pay off their conventional 30-year mortgage in under 10 years, and without changing their lifestyle? If so, you probably thought it was a scam because something like that couldn’t possibly be true, right?. But it IS. The technique is called “mortgage acceleration“, and it’s a system that homeowners around the world have used for over 35 years.
Homeowners using this system save tens, even hundreds of thousands of dollars in mortgage interest. It may be true that few people in America know of such a system, but I’ll bet that it’s going to get a LOT of attention now that the tax law is kicking in.