President Trump’s tax plan may render the country’s cherished mortgage-interest tax deduction useless to as many as 25 million Americans, according to new analysis by property-data provider Trulia.
The White House claims the average family will benefit under the Trump’s proposed reforms, with low-to-middle income households effectively getting a tax cut, Bloomberg reported. Treasury secretary Steven Mnuchin has said the administration will not do away with the mortgage break, however there are plans to raise the standard allowance from $12,700 to $24,000 for a married couple filing together, and only allow deductions for home loans and charitable donations. That means itemizing may not be valuable for average taxpayers, according to the publication.
According to Trulia’s analysis, a married couple would need a home-loan balance of approximately $608,000, before it would be worthwhile to use mortgage break. That’s an increase from around $322,000 today, according to Bloomberg. The median home price in the U.S was $232,100 last quarter.
Cities where home prices are rising rapidly will be most affected, and a drop in demand could drag values down across the country. The National Association of Realtors is against the changes, claiming it will remain in name only.
According to Mark Zandi, of Moody’s Analytics, the changes are a “backdoor way of rendering the mortgage interest deduction close to worthless.” [Bloomberg] — Miriam Hall