Many homeowners, buyers and sellers are left wondering how the tax reform legislation will affect them. The plan, which is expected to lower income tax bills next year for many households, is the most significant overhaul to the tax code since 1986. Several provisions that have a direct impact on the housing market were added, taken away or altered during the legislative process, leaving confusion about what remains in the bill.

Here is a look at what the final version contains and what it means to homeowners, buyers and sellers.

• Standard deduction: The new law raises the standard deduction to $12,000 for single filers and $24,000 for joint filers. For many homeowners, it no longer makes sense to itemize deductions.

• Mortgage interest deductions: The new law caps the limit on deductible mortgage debt at $750,000 for loans taken out after Dec. 14. (Loans made before that date can continue to deduct interest on mortgage debt up to $1 million.) Homeowners can refinance mortgage debts that existed before Dec. 14 up to $1 million and still deduct the interest as long as the new loan does not exceed the amount refinanced. The interest on a home-equity loan can be deducted as long as the proceeds are used to substantially improve the home. Mortgage interest on second homes can be deducted but is subject to the $750,000 limit.

• State and local property taxes: The new law limits the property tax deduction to $10,000. The bill specifically precludes prepaying 2018 state and local income taxes in 2017.

• Capital gains exclusion: Home sellers can exclude up to $500,000 for joint filers or $250,000 for single filers for capital gains when selling a primary home as long as the homeowner has lived in the residence for two of the past five years. An earlier proposal would have increased that requirement to five out of the last eight years.

• Deduction for casualty losses: The law restricts the deduction to only losses attributable to a presidentially declared disaster.

• Moving expenses: The law eliminates the deduction except for members of the military.

• Estate tax: The law doubles the estate tax exemption to $11.2 million.

• Historic Tax Credit: The HTC has been used to fund renovations in more than 40,000 historic structures since 1981. The law continues to provide a 20 percent credit when the certified historic property is placed into service but the new law spreads the deduction over five years.

• Low-Income Housing Tax Credit: The bill retains the 4 percent LIHTC, which funds about a third of all affordable housing construction.

Correction: This story was updated at 11:26 a.m. on Dec. 21, 2017 to clarify the prepaying of local income taxes.

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