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.

Mortgage Interest

  • 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.