Wednesday, March 07, 2018

In Nashville owners of median-priced homes will lose their home tax deduction but end up with a lower overall tax bill.

Excerpted from Apartment List Rentonomics:
  • The recently passed Tax Cuts and Jobs Act of 2017 makes significant changes to longstanding tax benefits for homeowners: (1) the cap on the mortgage interest deduction has been reduced from $1 million to $750,000; (2) deductions for state and local taxes, including property taxes, have been capped at $10,000; and (3) standard deductions have been doubled, such that fewer homeowners will itemize their tax filings.
  • The new legislation hits homeowners hardest in the expensive coastal markets across California and throughout the Northeast. A homeowner with a median-priced home in the San Francisco metro will receive approximately $4,500 dollars less annually in housing tax deductions under the new plan; in the Boston metro, the median homeowner will receive $1,700 less. For Bay Area homeowners of median-priced homes, the lost deductions could total more than $100,00 over the course of a 30-year mortgage.
  • The impact of the changes is felt disproportionately in left-leaning parts of the country. There are 15 states in which the median homeowner will receive at least $100 less in housing tax deductions under the new plan — President Trump carried none of these states in the 2016 election.
  • With the increased standard deduction, many households who lose housing tax deductions may still end up with a lower overall tax bill, though the loss of housing deductions still amounts to a shifting of incentives that make homeownership less attractive. That said, the decision to purchase a home is affected by numerous factors; changes to the tax code will likely have limited impact on that decision in most parts of the country, but could be more impactful in the nation’s most expensive markets.
For a detailed report on the recently passed Tax Cut and Jobs Act and the impact on housing deductions and an interactive map showing the impact on each county in the United States, follow this link.

Stumble Upon Toolbar
My Zimbio
Top Stories

No comments:

Post a Comment