The Tax Cuts and Jobs Act in 2018 trimmed tax deductions on mortgage interest and property taxes, but homeownership still pays off at tax time.

The new law caps mortgage interest you can write off at loan amounts of $750,000, a drop from the previous limit of $1 million. If your loan was in place before Dec. 15, 2017, the loan is grandfathered in, and the $1 million maximum amount still applies.

If not, you cannot write off interest paid on mortgage debt over $750,000. The debt must be “qualified personal residence debt,” which generally means the mortgage is backed by either a primary residence, second/vacation home, or by home equity debt that was used to substantially improve one of these residences.

If you rent out the second home, you must stay at the property for the longer of 14 days or more than 10 percent of the number of days you rented it out.

If you used a home equity loan to pay medical expenses, take a cruise, or anything other than home improvements, the interest is no longer tax deductible. The total of all mortgages cannot exceed the limit of $750,000.

The state and local taxes you pay — income, sales, and property taxes — are tax deductible up to a maximum of $10,000 whether you are single or married. Only those “ad valorem” property taxes that are based on the assessed value of the property can be deducted.

Special Assessments such as those for police, fire services, or Mello Roos community facilities districts that are assessed uniformly across all property in the district are not tax deductible, according to IRS rules.

If you bought a property in 2019, bring your settlement statement to your tax preparer to verify the long list of items paid through escrow that can be used as a deduction, including prepaid interest or points paid on a new mortgage, escrow, title fees and other closing costs in a home purchase.

Don’t forget to check for prorated property taxes paid through escrow. If you sold a property in 2019, seller closing costs can be used not as a line item deduction, but to reduce taxable gain upon sale.

Home improvements to make your property more marketable can be deductible as a selling expense if they were made within 90 days of closing. Find more tax information for homeowners in IRS Publication 530.

Adriana Donofrio deasypennerpodley Glendora (626) 926-9700 adonofrio@dppre.com