Mar 13, 2017
If some in the nation’s capital get their wish, itemizing one’s taxes may soon go the way of disco and the dial telephone for most filers – and the possibility has some realtors sweating.
That’s because, while tax reform proposals are still a dime a dozen in Washington, January’s change in power could also herald equally important changes in the way the federal tax code encourages people to purchase their own homes, something which may impact property values over the longer term.
The St. Louis Post-Dispatch reports that some ideas under consideration could include a substantial increase in the standard deduction for married couples. While this change wouldn’t cost families any more cash on April 15, the possibility does worry some observers since it would make itemizing things like home mortgage interest a useless exercise for non-wealthy filers who don’t have massive deductions.
An analyst for the Tax Policy Center notes that the new standard deduction, pegged at $24,000 per couple under at least one Republican plan, could slash the share of filers using the mortgage interest write-off to only a fraction of the 30 percent who employ it at present.
Lack of this longtime sweetener for middle-class home buyers might slacken the housing market causing an unwelcome shrinkage in home prices, something that was a key element in the 2008 economic implosion.
President Donald Trump even spoke during the campaign about a possible $30,000 standard deduction. However, it remains unclear which – if any – of the current tax proposals will ultimately earn the administration’s blessing.