Passing US tax reform bill raises concern
According to a new nationwide consumer survey from realtor.com, the Tax Cuts and Jobs Act passed by Congress on Dec. 20th, 2017 is raising anxiety about owning a home, with a majority of respondents reporting that the tax bill makes them either “concerned” (36.2 percent) or “very concerned” (17.2 percent) about being a homeowner. In contrast, approximately a quarter of respondents said that the bill makes them feel “positive” (15.0 percent) or “very positive” (7.2 percent) about home ownership. Only 22.9 percent said that the tax bill would not change their plans to purchase, while 57.1 percent said that the bill would not change their plans to sell.
The Tax Cuts and Jobs Act will provide many people with higher after-tax incomes, which is expected to put upward pressure on home prices and mortgage rates. It caps the mortgage interest rate deduction at $750,000 and increases the standard deduction, which will eliminate the tax benefits of homeownership for many people and could decrease sales and home prices in expensive areas.
“The bill will have a significant impact on the housing market and overall economy, so it makes sense that people are wondering what it means to them,” said realtor.com Senior Economist Joseph Kirchner, Ph.D. “Some house hunters – particularly wealthy buyers – will see an increase in after-tax income making an already tough housing market even more competitive. This increased demand could drive prices up even higher than they are already. And changes in the deductibility of mortgage interest and state and local taxes could cause challenges for many home owners.”
Realtor.com findings are part of an online survey of 2,324 randomly selected online respondents across the U.S. conducted on behalf of realtor.com between Dec. 18th and 19th, 2017.
On the West coast, California homeowners and consumers will be hit hard by tax reform bill, says the California Association of Realtors.
The California Association of Realtors president Steve White tells The World Property Journal, “While the impact of this bill may not be as harmful in many parts of the country, here in California where the typical home costs two and a half times the national home price, homeowners and would-be buyers will be hit especially hard. As we move forward and learn the true and full impact of this legislation, we hope we can work with Congress to make the necessary changes that will keep housing as the foundation of this great nation’s economy.”
White continues, “We are disappointed that Congress has passed tax reform legislation that puts home values at risk and dramatically undercuts the incentive to own a home.”