The housing lobby on Thursday slammed the House tax reform plan as an attack on the long tradition of government subsidies for home ownership.
The proposal would cap the mortgage interest deduction at $500,000 for new home purchases but not affect existing home owners. It also would eliminate deductions for state and local income taxes but perserve the writeoff for property taxes, capped at $10,000. By doubling the standard deduction from $12,700 to $24,400 for married couples, the bill would make the mortgage interest and property tax deductions less advantageous.
Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas, issued a statement reading, in part, “The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations. The bill eviscerates existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives. And capping mortgage interest at $500,000 for new home purchases means that home buyers in expensive markets will effectively lose this housing tax benefit moving forward.”
The Realtors were similarly critical.
“This legislation closely tracks with the House Republican Blueprint for tax reform, which threatens home values and takes money straight from the pockets of homeowners,” said NAR President William E. Brown, a second-generation Realtor® from Alamo, California and founder of Investment Properties. “Realtors believe in the promise of lower tax rates, but this bill is nowhere near as good a deal as the one middle-class homeowners get under current law. Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford.”
MacDonald also took issue with the discrepancy between the proposed 20% tax on corporations and the 25% that would be levied against so-called pass-though businesses–partnership, S corporations and LLCs. “Meanwhile, as corporations receive a major tax cut, small businesses, which generate the lion’s share of job growth, get limited relief.”
