LIHTCs are diminished, property tax deductions are gone, and the mortgage interest deduction is capped The House of Representatives passed its version of tax reform on a largely party-line vote on Thursday, approving $1.5 trillion in tax cuts and bringing sweeping changes to a number of housing measures one step closer to reality.
The bill passed 227 to 205 with no Democrats voting for the bill and 13 Republicans voting against it. Many of the Republicans who voted against it oppose the bill?s elimination of state and local tax deductions and the cap on property tax deductions of $10,000. Republicans from districts with high property values, in states such as New York and New Jersey, had expressed previous opposition to the bill.
While the Senate bill proposes very few changes related to housing measures, the House bill makes adjustments to the mortgage interest deduction, the Historic Tax Credit (HTC), and the Low-Income Housing Tax Credit (LIHTC), in addition to changes in the corporate tax rate, private activity bonds, and the standard deduction that indirectly impact these measures. Current law allows taxpayers to deduct mortgage interest from their taxable income on interest up to $1 million in property value. The House bill lowers the cap to $500,000.
Potentially more impactful to the mortgage interest deduction is the bill?s proposal to double the standard deduction from $6,350 for individuals and $12,700 for married couples to $12,000 for individuals and $24,...