The Tax Cuts and Jobs Act (TCJA) trimmed two important tax breaks for homeowners but left another big break untouched.

Before the TCJA, if you itemized your deductions by filing a Schedule A on your Form 1040, you could deduct interest paid on up to $1 million of home acquisition debt plus $100,000 of home equity loan debt on a first or second residence. You were also allowed to deduct an unlimited amount of personal state and local income and property taxes on Schedule A.

For 2018-2025 the TCJA reset the limits from $1 million to $750,000 of home acquisition debt and generally eliminated the deduction for interest paid on up to $100k of home equity debt. Fortunately, there was a grandfather rule in the TCJA which indicates that the changes to home acquisition debt limits do not affect mortgages taken out before 12/16/17. However, for those new homeowners with large mortgages in excess of $750,000, some of the interest paid will no longer be deductible on Schedule A.

For 2018-2025 the TCJA limits the amount of personal state and local income and property taxes to a combined total of only $10,000. It additionally completely disallows a deduction for property taxes paid on residences in foreign countries.

However, the TCJA preserves the valuable tax break that allows a homeowner to potentially exclude up to $250,000 of gain from a qualified home sale or $500,000 if you are a married joint filer. Both the proposed House and Senate versions of the bill included restrictions on this big tax saver but the final bill did not change existing rules.

The bottom line is that many homeowners will be affected by the TCJA’s new limits on deducting real estate taxes paid and deducting mortgage interest paid (particularly if they have a home equity loan). However, the home sale exclusion under Section 121 remains unchanged. So, for those homeowners contemplating selling, the tax benefit of a $500,000 gain sale exclusion (if married) remains.