The U.S. House and Senate could vote on the GOP tax bill today. That could have a depressing effect on home ownership as some deductions go away or will be reduced. There are fears that fewer people will be buying homes. Andy Alloway is the owner of Nebraska Realty and a director with the Omaha Area Board of Realtors and says the mortgage interest deduction is the one they have been fighting to maintain as that is an age old benefit to home ownership.
Alloway says, “I think we dodged a bullet because the mortgage interest deduction, they were going to either A; eliminate it or (B) cap it at $500,000 for new loans. The compromised at $750,000. That was really good. Had it been $500,000, that would have been a significant impact.”
Alloway says unfortunately there will be winners and losers with this bill. The people that will be affected are higher earners that have a $500,000 house with current interest rates and property taxes. They could be paying $3,000 to $8,000 more if they itemize deductions.
Alloway says there has been problem in the real estate market for the past few years is affordable housing inventory. He says there is a lack of homes available under that $250,000 mark. He says land values have gone up as well as the cost of building. People are staying in their homes longer and not upsizing like they used to. Alloway says people are asking themselves is it worth it to pay higher property taxes if they don’t get a tax break on through state and local taxes. He says that hurts the real estate market as more people stay put.