The Tax Cuts And Jobs Act was signed into law this week, and a significant portion of your Denton County property taxes may no longer be deductible under the new law in 2018. Aside from being one of the worst researched and most ill-conceived pieces of legislation in modern history, the new tax bill is very favorable to corporate America. Unfortunately the new tax “reform” is not exactly friendly to home ownership. It remains to be seen how the new tax law will affect DFW area home prices, but the new rules certainly don’t favor pricier DFW sub-markets or larger luxury homes in Denton County.

Here are some of the more significant real estate related changes in the new bill that could affect your Denton County property taxes:

  • Doubles the standard deduction to $24,000
  • Lowers the cap on the mortgage interest deduction for new purchase mortgages
  • Caps the deduction for state and local taxes (SALT) at $10,000, inclusive of property taxes
  • Eliminates the deduction for interest on home-equity debt, such as HELOCs.

Among the biggest changes coming in 2018 is the doubling of the standard deduction, from $12,000 to $24,000 for married couples filing jointly. This is a big equalizer in terms of putting renter households on a more equal footing with single-family homeowners. The flip-side of this equation is the fact that the new bill also eliminates the $4050 personal exemption allowed for each family member resulting in a loss of $8100 in personal exemptions. Regardless, the net increase in the standard deduction still makes itemizing a less appealing option for many more families with modest size homes.

If you are a luxury property owner in Denton County Texas, you will likely lose a big portion of your deduction for state and local taxes. With the average price of a home in Denton County just north of $350,000 average property tax bills are already around $8000. That doesn’t leave much room for deducting sales taxes. Residents within the city of Denton Texas should not be hit quite as hard since average home prices in Denton are much lower than the surrounding county.

Larger estates and luxury homes in Denton County are going to see the biggest hit. Some luxury property owners within Denton County could also lose out on some of their mortgage interest deduction as well with the new lower cap of $750,000. Expensive markets will be it the hardest, but likely nowhere near what’s in store in high priced zip codes in Manhattan or Silicon Valley.

In general the new tax bill is a big blow to high-tax states. Fortunately Texas is not necessarily in that category. The exception of course is that there are a number of high property tax areas in Texas sub-markets what will be affected by the new rules. Whether you are talking about Dallas, Houston, Austin or San Antonio there are a number of expensive communities that are going to become even more expensive in terms of carrying costs with the new tax “reform” in place.

If you are in the market for a Denton County home, be sure to check the overall tax rate and total tax obligation before you buy. With the new cap on SALT deductions and other changes, expensive homes with high property tax bills will lose previously favorable treatment. The rules just changed, and not in a way that favors expensive Denton County homes.