Tax Change on Mortgages Could Shake Up the Housing Market - ABI

The Republican tax plan unveiled yesterday takes aim at the most sacred of tax deductions: the provision that subsidizes homeownership by allowing the deduction of interest on mortgage debt, the New York Times reported. For most of America, the impact would be minimal. The proposed bill reduces the maximum deduction from $1 million to $500,000, or more than double the median home price in the U.S. of roughly $200,000. Less than 3 percent of home mortgages are more than $500,000, according to data from CoreLogic. But if the idea holds — and history suggests that will be difficult — it will echo loudly through higher-priced cities on the coasts. “The impact on the market is going to be recognizable,” said Ure R. Kretowicz, chief executive of Cornerstone Communities, a homebuilder in San Diego. “There’s going to be less incentive to build, and less incentive to buy.”

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