tax

Key Income Tax Changes for Mortgage Interest

Congress keeps chipping away at itemized deductions like the one for mortgage interest. This includes the latest changes under the Tax Cuts and Jobs Act (TCJA) for 2018 through 2025. The good news: Generally, you can still deduct most or all of the mortgage interest you pay if you continue to itemize deductions on your personal tax return.

Background: Prior to the TCA, you could deduct the interest paid on either acquisition debt or home equity debt, or both, within generous limits.

  • Acquisition debt: This is defined as a debt where you use the mortgage proceeds to buy, build or substantially improve the home. Typically, acquisition debt represents the main part of a mortgage interest deduction. To qualify for the write-off, the loan must be secured by a qualified residence, such as your principal residence or a second home like a vacation home. The interest is deductible on loans up to a $1 million threshold.
  • Home equity debt: When permitted by state law, you previously could deduct the interest on home equity loans secured by a qualified residence, regardless of how the proceeds were used. With a home equity debt, deductions were limited to interest paid on the first $100,000 of debt. Furthermore, the loan amount could not exceed your equity in the home.

Along with other itemized deductions, mortgage interest deductions are claimed on Schedule A of Form 1040. They were subject to the “Pease rule” reducing itemized deductions of high-income taxpayers.

But the TCJA tightened up the rules, beginning in 2018. Notably, it imposed these three changes.

  1. The threshold for deducting interest paid on acquisition debt is lowered from $1 million to $750,000. This applies to loans originating after December 15, 2017 (or April 1, 2018 if there was a binding contract in place before December
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German authorities search offices, homes in DFB tax evasion probe

German prosecutors and tax authorities searched offices of the German Football Association (DFB) as well as private homes of current and former officials on suspicion of serious tax evasion, the Frankfurt prosecutors’ office said on Wednesday.

It said six unnamed former and current officials of the DFB were suspected of having intentionally falsely declared income from advertising inside football stadiums during home games of the national team in 2014 and 2015 as income from asset management, leading to €4.7 million in unpaid taxes.

The DFB, which does not pay taxes for any income from asset management but is obliged to do so for earnings from any commercial activities, did not immediately respond to a Reuters request for comment.

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Some 200 officials were deployed in the searches that took place across several locations in five federal states.

“Based on the investigation until now there is the suspicion that those accused knew of the tax incorrectness but consciously chose it to give DFB a major tax advantage,” the prosecutors’ office said in a statement.

It did not name the six people nor did it provide any details of their positions within the organisation.

This is the latest in a series of legal cases that have tarnished the world’s biggest football federation which was also investigated in relation to a suspected misuse of funds in relation to the 2006 World Cup in Germany.

Theo Zwanziger, who headed the DFB from 2006-2012, and his successor Wolfgang Niersbach were investigated for years in Germany and Switzerland over those allegations. Both have denied any wrongdoing.

Reinhard Grindel,

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The Daily 202: Trump’s $750 tax bill helps Biden sharpen pitch to working-class Whites who defected to GOP in 2016

“We’re picking up an awful lot of the folks who used to be Democrats. They’re coming back home,” Biden told a small group of reporters. “They know they’ve been screwed by Trump, but also they’re not sure that there’s the old Democratic Party back looking at them, listening to them, and so I think it’s important.”

Biden made these comments at John Murtha Airport. Murtha, very much a creature of that “old Democratic Party,” represented Johnstown in Congress from 1974 until his death in 2010. The area’s realignment toward the GOP has accelerated during the intervening decade.

In 2016, Trump carried Pennsylvania, Wisconsin and Michigan by less than one percentage point each. All three states had voted for every Democratic presidential nominee in the previous six elections, including the two in which Biden was the vice-presidential nominee, before flipping to Trump. A key factor was that the president really ran up his score in rural areas like Johnstown.

Pennsylvania’s 20 electoral votes make it one of the most critical battlegrounds, and Biden predicted that over the next month he will be able to win over more Trump 2016 voters in rural counties like the ones he visited on Wednesday. “Even if we just cut the margin, it makes a gigantic difference,” Biden said at the airport named for Murtha. “A lot of White working-class Democrats thought we forgot them and didn’t pay attention. I want them to know – I mean sincerely – that I’m going to be your president. I hear them. I listen to them. I get it. I get their sense of being left behind.”

Exit polls show that Trump won White voters without four-year college degrees by more than 30 points both nationally and in Pennsylvania four years ago. This group accounts for about half of

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Home renovation tax credit proposed by Sask. Party, NDP proposes wealth tax

The Saskatchewan Party is promising a new home renovation tax credit while the NDP said it would bring in a wealth tax as the election campaign came to Saskatoon on Wednesday.

Scott Moe, the leader of the Saskatchewan Party, said homeowners would be able to claim a 10.5 per cent tax credit on up to $20,000 of eligible renovations under his proposed tax credit.

“In this year’s budget, we reduced the PST on new home construction,” Moe said in a statement.

“We also want to provide a break to those who are fixing up their existing home. This new home renovation tax credit does just that.”

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The tax credit would include permanent additions to a homeowner’s primary residence but does not include items like furniture, appliances, hot tubs, tools or maintenance, Moe said

The cost of the program — which would run from Oct. 1, 2020, to Dec. 31, 2022 — is estimated by the Saskatchewan Party at $124 million.

The party said the maximum eligible amount allowed to be claimed to the end of 2021 is $11,000 and $9,000 for 2022.

Meanwhile, NDP Leader Ryan Meili said his proposed wealth tax would bring tax fairness to the province.

“We can do better — and ask the wealthiest amongst us to help ensure every family has access to the health care they need, when they need it,” Meili said in a statement.

“It’s time for a tax plan that puts people first — not the Sask. Party’s old boys’ club.”

Read more:
NDP faces uphill

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Saskatchewan Party outlines new home renovation tax credit as first election promise



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© Provided by The Canadian Press


SASKATOON — Saskatchewan Party Leader Scott Moe is promising to bring in a new tax credit for home renovations if his party is re-elected.

Moe says he believes the credit would help drive the economy and make renovations more affordable — key themes of his campaign for the Oct. 26 vote.

Homeowners would be able to claim about 11 per cent on up to $20,000 worth of renovation-related expenses between Oct. 1 and the end of 2022.

The Saskatchewan Party says the credit would save people up to $2,100 and cost the province $124 million over two years.

Moe says the credit would benefit the economy by encouraging people to spend money and hire for building.

He made the announcement in Saskatoon, one of the cities considered an election battleground.

More specifically, he was in the NDP-held constituency of Saskatoon Riversdale along with the party’s candidate.

That seat belonged to former NDP premiers Roy Romanow and Lorne Calvert and was won by the New Democrats in the 2016 election, but by less than 250 votes.

Moe has said he believes the Saskatchewan Party connects with urban voters, despite losses in recent byelections and some narrow victories in 2016.

NDP Leader Ryan Meili was also to be in Saskatoon for an announcement about taxes before travelling to Prince Albert to talk about health and infrastructure.

This report by The Canadian Press was first published Sept. 30, 2020

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