Tax Cuts and Jobs Act passes House, reduces home tax advantages
Earlier this afternoon, the House voted 227-205 to pass the Tax Cuts and Jobs Act, the tax proposal that caps the mortgage interest deduction at $500,000 and the property tax deduction at $10,000. The House must now reconcile its plan with the Senate bill, under review by the Senate Finance Committee, to reach a vote in the Senate.
The legislation as written would have a huge effect on Washington homeowners. Under the GOP plan, home buyers could only deduct interest on up to $500,000 of their mortgage loan. These changes would affect all homes purchased after November 2, 2017.
With the median price for a single-family home in King County at $630,000, Washington homeowners stand to lose thousands in tax savings each year. Sixty-six percent (66%) of single-family homes sold in King County from January through October this year had a price of over $500,000. “It’s already hard enough to buy a home in Puget Sound,” said Senator Maria Cantwell (D-WA). “We don’t want to make it harder.”
The plan also eliminates mortgage interest deduction for second homes and the deduction for moving expenses.
The Senate’s proposal isn’t much better; though the mortgage interest deduction limit remains at $1 million, the bill eliminates deductions for state and local property taxes entirely.
Additionally, the Joint Committee on Taxation found that taxes on individuals making under $75,000 would increase in ten years’ time because of the expiration of temporary provisions provided to individuals in the bill.
“This plan would be devastating for families and communities in Washington state and across the country, and I am going to fight back against it as hard as I can,” said Senator Patty Murray (D-WA) in a statement.
Patti Hill, 2016 Seattle King County REALTORS® President, was part of a group of REALTORS® who flew to Washington earlier this week to meet with members of Congress to discuss how the plan will affect homeowners across the country. As lawmakers prepare to take the bill to the Senate, REALTORS® will continue talks with Senators and fight for homeownership.
While Seattle King County REALTORS® supports tax reform, we do not support a plan that takes away incentives for homeownership and threatens to reduce the equity of many homeowners.