Senate's Tax Cut and Job Act -- Effects on Homeowners
Congress recently introduced a tax reform bill in the House that would have resounding effects on California homeowners.
Among the many provisions in the Tax Cut and Job Act that will impact real estate:
Lowers the mortgage interest deduction cap from $1 million to $500,000
Eliminates the mortgage interest deduction on second homes
Homeowners would longer be able to deduct the interest on home equity loans
Eliminates state and local income tax deductions
Caps property tax deductions at $10,000
Extends the qualification period for exclusion of capital gains tax on the sale of a primary home from two out of the last five years to five out of the last eight years
These changes would negatively impact the incentives for homeownership and unfairly hurt California homebuyers. California’s homeownership rate is already among the lowest in the nation, and there is no reason it should go any lower.
Capping the mortgage interest deduction essentially nullifies the incentive for homeownership, thereby removing the incentive for people to buy homes. Homeownership has and continues to be the best way for families to build wealth and move up the socioeconomic ladder. Congress has incentivized homeownership through the tax code for more than 100 years, and they should not change things now.
If you have any questions regarding this bill and how it may affect you, don’t hesitate to contact Spann & Associates!
*Thank you to Goeff McIntosh and CAR for information and verbiage*