If you thought health care reform was a mess, you won’t believe what the Grand Old Party has in store for your home. Republicans have declared war on the housing industry, and in effect, American homeowners. The new tax plan unveiled by Republicans in the House would cap the mortgage interest deduction at $500,000 on new home purchases. That’s down from the current $1 million. A million bucks is a lot of money, but in New York, LA, San Francisco, and a lot of cities in between, seven figures doesn’t buy what it used to. And capping the deduction will no doubt scare off potential homebuyers, which is frightening the heck out of America’s homebuilders.
The GOP’s plan also eliminates the deductibility of local property taxes to $10,000. Here’s another one; The bill doubles the standard deduction to $24,000, thereby making it more likely taxpayers won’t itemize. And a big reason people itemize is mortgage deduction. And that’s huge. If there are fewer buyers, home prices will drop. Equity could dry up. Or that’s the theory. So, this bill could be bad for builders, buyers and homeowners. Oh, and those homeowners make up nearly two thirds of Americans.
