Last week the House passed a tax reform package that the National Association of REALTORS® calls a tax hike on many middle-class homeowners and says would lower property values for all homeowners.
“It’s disappointing to see this legislation move forward, but the real work to shape this debate is just getting started,” NAR President Elizabeth Mendenhall said in a statement.
The bill, called the Tax Cuts and Jobs act, was passed by a vote of 227 to 205 along party lines. It was approved entirely by Republicans—although several members of the party joined Democrats in opposition. The bill, which would increase the federal deficit by $1.5 trillion over 10 years, cuts the top corporate tax rate from 35 percent to 20 percent and, in a move that affects only the wealthiest households, nearly doubles the threshold for the estate tax and then phases it out entirely.
To pay for these and other measures, the bill would institute these changes:
Eliminates or curtails most itemized deductions, except those for mortgage interest and charitable contributions. The MID would be limited to mortgages of up to $500,000—half of the current limit—and the property tax deduction would be capped at $10,000.
Restricts the exclusion on gains from the sale of a principal residence by requiring households to live in the house for five of the last eight years, instead of two of the last five years. The bill also reduces the benefit for higher-income households. The exemption today applies to proceeds of up to $250,000 for individuals and $500,000 for married couples filing jointly.
Nearly doubles the standard deduction to $12,000 for individuals and $24,000 for married couples, but that increase is largely offset by elimination of the personal and dependency exemptions—a change that could hit larger families, as well as those with older children, particularly hard.