Deduction for State and Local Taxes
- Taxpayers may claim an itemized deduction up to $10,000 for the aggregate of state/local taxes and real estate taxes.
- California never allowed a deduction for state/local taxes. They did not adopt the new changes so real estate taxes can exceed the $10,000.
- This does not impact real estate taxes for rental properties. The full deduction is still allowed.
- For acquisition indebtedness incurred before 2018, the limit is $1,000,000.
- For acquisition indebtedness incurred in 2018 or later, the limit is $750,000.
- The additional $100,000 home equity indebtedness is no longer allowed.
- California did not adopt the new changes and will follow the old rules.
- These rules apply to a first and second home.