How the Congressional "Tax Reform" Bill Impacts Homeowners
December 1st 2017 from the California Association of Realtors
The California Association of Realtors (CAR) and National Association of Realtors (NAR) continue to strongly OPPOSE the Congressional "Tax Reform" bill that is being considered in Congress. The current proposal only pays lip service to incentivizing homeownership. The Senate may vote on this as soon as this week. The House could vote on the final version of the bill as soon as early next week. Here are the details of how it will impact home owners...
The Congressional "Tax Reform" bill weakens the mortgage interest deduction.
- It caps the mortgage interest deduction to the interest on a mortgage principle of $500,000.
- Homeowners would no longer be able to deduct the interest they pay on home equity loans.
- The deductibility would be eliminated for second homes and limited to loans on a family’s primary residence.
Families build wealth through homeownership. According to a report by the Federal Reserve in 2016, homeowners amassed wealth at a greater rate than renters. Renters had a median net worth of $5,200 while homeowners had a net worth of $231,400.
Tax Reform Disproportionately Hurts Californians. California is already a “donor” state, paying more in tax revenues to the federal government than it gets back. As a matter of fact, California ranks 42nd out of 50 states in the amount of federal spending per capita in the state. Now, without being able to fully deduct their state and local taxes, Californians will shoulder even more of the federal tax burden.
Here’s What Else the Bill Does:
- Extends the qualification for capital gains exclusion from two years to five years for primary residences.
- Caps the property tax deduction at $10,000.
- Taxpayers won’t be able to deduct their student loan interest.
- Medical expenses won’t be deductible.
- Many small businesses won’t benefit. A Lot of small businesses that are classified as professional service providers won’t be able to get the lower corporate tax rate.
Not only is this legislation a clear and present danger to American homeownership, it will cost our children and grandchildren $1.5 trillion in new federal debt!