If you live in a high-cost locale, brace for higher taxes. It may be a few years before experts can accurately assess how the new tax reform law will affect each city?s individual housing market, but one thing is clear: For the first time in a century, the federal government has backed away from subsidizing homeownership as a pathway to the ?American Dream.?
The specific mechanisms by which it?s doing this?lowering the cap on the mortgage-interest deduction (MID), capping state and local tax (SALT) deductions at $10,000, doubling the standard deduction?all interact with each other, sometimes canceling one of the others out, and will have different impacts depending on the housing market.
Here?s a good rule of thumb, though: If you live in a city (or for our purposes below, a county) with high housing costs, your market will likely get more expensive. If you live in a city with moderate to low housing costs, you may not notice any difference at all. Is there upside for homeowners in any market" It?s hard to find any. Sales prices down, taxes up
?It?s very hard to come up with how this is helpful to housing,? said Jonathan Miller, President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm ?It?s either neutral or negative; there?s no positive, at least that we?re aware of at the moment. All this does is make everything more expensive, at least in high-cost housing markets.?
As a result of the bill, Moody?s Analytics estimates that housing ...