Is H.R. 1 Really a Tax Cut?

I’m been listening to the various Congresspersons on TV talking about the tax cut bill – but what they talk about is lower overall tax rates but what is proposed to offset the lower rates is a direct hit to consumers and homeowners. Not only will millions of homeowners not benefit from the proposal, many will get a tax increase. Additionally, homeowners could lose substantial equity by the predicted 10% drop in home values if this bill is enacted.  We have barely recovered from the real estate crash of 2008 – it’s taken almost 10 years.  What are our representatives thinking?

            The house legislation includes a cap on mortgage interest deduction for new mortgages, limits on the exemption on Capital Gains Tax from the sale of a primary residence, elimination of the deduction for state and local income or sales taxes, elimination of the Mortgage Interest Deduction for second homes, elimination of the deduction for moving expenses, elimination of the deduction for personal casualty losses, such as from hurricanes or wildfires, elimination of the deduction on interest on student loans and elimination of the deduction for medical expenses, even for the elderly. All this from a bill that is supposed to improve the current system.
           

Home ownership is one of the bedrocks of our country and we need to make sure that any tax reform legislation protects middle-class home owners. Homeowners already pay 83% of all federal income taxes. Home-owning families with incomes from $50,000 to $200,000 could face average tax hikes of $815 in the year after enactment?

            Please write your congress men and women (Senators Chuck Schumer and Kirsten Gillibrand, Congressman Lee Zeldin, US House of Representatives) and ask them to reject this bill AND protect middle class homeowners. This legislation if not modified is a clear and present danger to American homeownership and could possible turn America from a home-owning nation to a home-renting nation. Tax reform should not become a tax increase for middle class homeowners.

Sources: National Association of Realtors, The Unveiled Tax Reform Legislation and Its Negative Impact on Housing Prices, November 13, 2017; The Wall Street Journal, Tax Plans Tweak the American Dream, November 13, 2017.