Of all the deductions the federal government may be eliminating to avoid the looming fiscal cliff, mortgage-based relief measures may have the biggest impact on Californians. According to an article from The Wall Street Journal last month, the Golden State has the highest average mortgage break in the country, which is largely why Californians recovered a mean value of $33,901 in tax deductions in 2010.
As a result, the possibility that the mortgage interest deduction may be permitted to expire this year has many people concerned about their income tax rates in 2013. A number of California families rely on this statute to lessen their financial burden.
Unsure how this change in federal tax law will affect your tax planning? The San Francisco Chronicle recently ran a piece on the scope of the mortgage interest deduction to help California residents understand its effects. The newspaper reports that 27 percent of filers from the Golden State claimed the deduction in 2010. The majority of taxpayers, the source writes, don’t cite the mortgage-interest deduction because doing so means they must make itemized claims rather than choosing the standard mortgage deduction. Since the set amount is typically higher – particularly for residents without high mortgage payments – most Californians select this option.
Despite the small percentage of people who benefited from the mortgage interest deduction, though, it is still very popular among taxpayers throughout the state. The California Association of Realtors surveyed 800 residents who purchased homes in the last year and discovered that almost 80 percent of them had taken the deduction into account when they decided to buy.
If you’re concerned about the ongoing fiscal cliff negotiations and want to ensure that you don’t pay more than your due next year, consult an experienced tax attorney at Moskowitz LLP in San Francisco. These professionals can assist you with your tax planning so you can make the most of available deductions.