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Federal Tax Reform Proposals Could Result in Homeowners Paying More

June 8, 2017

Tax reform proposals were the talk on Capitol Hill in May, as Realtors® in partnership with the National Association of Realtors® (NAR) met with members of Congress to discuss concerns over the latest options being reviewed. The NAR has put together an Impact Study highlighting just how these latest tax reforms could negatively impact homeowners.

While the tax reform proposal seeks to simplify deductions, if the changes are implemented as they now stand, the majority of homeowners would see a significant increase in their annual tax bill. They will lose out on an estimated $1 Trillion in tax savings. According to the NAR, tax brackets would be consolidated, from 5 down to 3 groupings. Tax rates would also be lowered, while the Standard tax deduction would be doubled.

The downfall of this plan is that all itemized deductions would no longer be allowed, except for mortgage interest and charity donations. If homeowners can no longer include a property tax deduction, middle-income earners, those making between $50,000- $200,000 annually, would see an average increase of $800 in their Federal tax bill.

new-home-1530833_640NAR research also shows that this would negatively impact home prices. If the reform proposals go through, after-tax costs for homeowners will increase, along with the cost of gaining equity; two important aspects which makes home ownership appealing. These changes could result in approximately a 10% drop in sale prices across the nation.

The possible negative impacts to homeowners would create what the NAR called an “unfair burden” put on the majority of tax payers. While lowering tax rates in general is a great idea, if it comes with a high price tag for the many, the benefits will be few and far for most.

The NAR is working with Congress to come up with a different solution to help protect homeowners. We will share updated information as it comes available to help keep you in the know. When you are ready to sell your home, my team and I are ready to help you through the entire process. Our goal is to make your experience both easy and pleasurable. Contact us today at (925) 634-7820, or by email at realestate@cecily.com.

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