Homeowners in New York, New Jersey, California and Connecticut are closely watching what the Republican tax overhaul will do to their home values.
The National Association of Realtors predicts that changes to property taxes, mortgage interest and deductions to state and local taxes will lower home values and decrease already struggling inventory levels across the country, Bloomberg reported. A proposed change to the capital-gains tax on sales would possibly encourage homeowners to keep their properties off the market. The number of homes for sale has already decreased year-over-year for the past 29 months.
In Palo Alto, a typical homeowner selling after four years would pay an additional $75,000 in tax on gains from their home sale, according to an analysis by a Zillow Group economist.
Both the Senate and House bills seek to repeal deductions for state and local income taxes. They also cap deductions for property taxes at $10,000. The House version seeks to limit deductions on mortgage interest at $500,000, down from $1 million, which could greatly limit first-time homebuyers from entering the high-priced markets.
“Everyone wants information and any kind of fear just paralyzes people,” said Nick Boniakowski, a New Jersey broker who works for Redfin. “The uncertainty is freaking people out.’ [Bloomberg] — Kathryn Brenzel