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This is the same answer as my previous post. I have not been able to deduct either state income tax or property tax since I was a resident because of the AMT.
AMT phases out (effectively) above 800k or so, depending on what other deductions you have. This is extremely bad for very high income earners who are regular wage earners.
I agree. And I think that means we are presuma going to see price decreases on homes currently selling for above 500k with over 10k property taxes. Especially since mortgage interest on purchases over 500k is now not tax deductible either
This is all assuming this passes, which is a big question mark. If it does pass, could certainly change (and I hope it does change)
The way I read it, the interest on the first $500k would still be deductible. That makes it far less of a issue for most people. Somerset County is one of the more expensive counties in which to buy real estate, and the median house price is under $500k.
AMT phases out (effectively) above 800k or so, depending on what other deductions you have. This is extremely bad for very high income earners who are regular wage earners.
I wouldn’t say it phases out. A more accurate way to say it is that it becomes irrelevant. You are still not able to deduct state tax and property tax.
You have to talk to an account. AFAIK, AMT removal is the biggest tax break.
AMT basically ensures that no matter how much tax deductions you have, you still gotta pay that much based on the gross income reported.
What the new tax laws will hurt are people who have high price mortgages and deducting all the interests, taxes, etc against their income if they game the system such as under reporting then they will have to dish out some money since the deduction will only be capped at $10k.
I believe if we get rid of AMT and allow my property taxes deducted against my gross right now I would come out ahead of previous tax code.
My mortgage interest plus the $10K state tax work out to about $24,000, so itemizing vs not itemizing would pretty much be a wash. But I was hitting AMT before.
What happens to Obama's 3.8% F-U extra investment tax? I've been holding some securities expecting that to be repealed.
I wouldn’t say it phases out. A more accurate way to say it is that it becomes irrelevant. You are still not able to deduct state tax and property tax.
Huh? Yes you are (at least until this plan comes into effect).
Huh? Yes you are (at least until this plan comes into effect).
No. If you are paying the AMT or above the income level where it is relevant, you are not currently (effectively) deducting these taxes. Only mortgage interest with the AMT.
If you are above the income level where the AMT is relevant, it means you are paying enough at the top bracket to average a higher effective rate than the AMT rate, even with all of your deductions.
Last edited by AnesthesiaMD; 11-03-2017 at 10:28 AM..
No. If you are paying the AMT or above the income level where it is relevant, you are not currently (effectively) deducting these taxes. Only mortgage interest with the AMT.
If you are above the income level where the AMT is relevant, it means you are paying enough at the top bracket to average a higher effective rate than the AMT rate, even with all of your deductions.
OK...let's say you make 10mm a year and pay 1mm in state and local taxes (just throwing out numbers here). Before the current bill, you are not hit by AMT since you pay most of your tax at the 39.6% rate. However you do deduct your 1mm from your AGI before calculating tax. After this, you deduct (basically) nothing, so this new bill costs you about 390k. This probably reduces your takehome between 5 and 10 percent.
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