Many read and listened to news reports at the end of 2017 detailing the new tax laws signed by President Trump. There were many people and news outlets scrambling to understand the changes that were introduced. Of course, there was much speculation about the impact of the changes.
Recently, CNN published an article detailing how the new tax laws will slowly begin to impact the value of homes across the United States. In the article, written by Kathryn Vasel, some specific effects are detailed.
For one, the new tax law reduced the amount of interest on mortgage debt eligible for deductions from $1 million to $750, 000. Vasel explains that many buyers in the market for high-end, high priced homes might be more likely to negotiate a lower price in order to compensate for the smaller tax break. Purchasing homes might also be less attractive to buyers because they aren’t able to deduct as much of their real estate taxes. The tax law reduced the cap to $10,000; in many high-cost markets, home owners pay significantly more than $10, 000 in property taxes.
The financial impact of the tax cuts might result in increased interest rates and, subsequently mortgage rates. An increase in mortgage rates could keep some buyers out of the market and force home sellers to reduce prices in order to attract buyers.
Read the entire article.