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For many home buyers in Washington, the ability to deduct mortgage interest has historically been a key financial benefit of homeownership. However, tax law changes over the past several years have significantly altered how—and whether—homeowners benefit from these deductions.
The current rules stem from the Tax Cuts and Jobs Act, which introduced new limits and guidelines that remain in effect today. Understanding these rules is especially important for buyers in higher-cost markets like Seattle.
| Note: Many of the individual tax provisions established by the Tax Cuts and Jobs Act are slated to sunset after 2025. If no legislative changes are made, tax brackets are expected to increase to pre-2018 levels, the standard deduction will shrink, and the rules governing itemized deductions will likely be revised. |
The Tax Cuts and Jobs Act (TCJA) made several important changes that affect homeowners in Washington State:
For homeowners with mortgages taken out before the cutoff date, the previous $1 million mortgage interest deduction limit may still apply due to grandfathering provisions.
One of the most important—and often overlooked—impacts of the TCJA is the increase in the standard deduction.
As a result, many homeowners no longer itemize their deductions. Instead, they take the standard deduction, which means they may not directly benefit from the mortgage interest deduction at all.
Whether you benefit depends on your total itemized deductions, which may include:
If these combined deductions do not exceed the standard deduction, itemizing may not provide additional tax savings.
In higher-cost housing markets like Seattle, home prices often exceed national averages.
This creates two important considerations:
At the same time, Seattle’s housing market has shifted in recent years, with more moderate price growth and increased inventory compared to peak conditions. While affordability remains a challenge, buyers today may have more flexibility when entering the market.
The TCJA also changed how interest on home equity loans and lines of credit (HELOCs) is treated:
Unlike mortgage interest rules, this provision applies regardless of when the loan was originated.
One of the most important considerations for today’s buyers is that many TCJA provisions are scheduled to expire after 2025 unless extended by Congress.
Potential changes could include:
Because of this uncertainty, homebuyers should stay informed and consider how future tax law changes could impact long-term affordability.
Looking to take out a mortgage in Washington? We can help. Sammamish Mortgage is a local, family-owned company based in Bellevue, WA. We serve borrowers across WA, OR, CO, CA, and ID since 1992. We provide a variety of mortgage programs with flexible criteria, and we’d love the opportunity to help you apply for a home loan. Visit our website to get an instant rate quote or to use our online mortgage calculator. Please contact us if you have mortgage-related questions or to get pre-approved for a mortgage.
Whether you’re buying a home or ready to refinance, our professionals can help.
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