Property Values :effected by GOP tax plan?

10 Replies

Property Values : effected by GOP tax plan? 

Originally posted by @Robert R. :

Property Values : effected by GOP tax plan? 

 Not good for California, New York, Mass., Conn., Maryland, Illinois and other high tax states. 

@Robert R. @Jocelyn Borg

Theoretically prices should drop a little in those high value states. I'm not certain buyers on average will be responsible enough to calculate not being able to deduct all of their mortgage interest. Mortgage deductions are going from 1M to 750K. Bank underwriters may lower max borrowing rates at high prices or even overall though which could lower those areas with extreme competition where people are willing to spend to where they are house poor.

Plus on average many in those coastal states will have higher taxes and lower effective income because they can only write off 10k state and local taxes. 

The lower tax rates will offset the Salt limits for many to varied extents. Calculated roughly someone with a MIL income and a 100K SALT will pay about 12K more on taxes. However, would expect someone with a million income, would also have accountants advising on ways to lower tax burdens, stocks with income taxed lower, the list goes on. 

We need to wait and see what the final bill looks like but all the "sky-is-falling" media and politicians can be ignored. They are the same ones that claimed the stock market and economy would tank if Trump won the election. They will continue bashing his tax plan just because they hate him.

Trump is a real estate guy with a lot of real estate friends. I expect his plan to be a boost to the economy and to the housing market. Everything I've read about it (actual facts, not opinion) seem to support my view.

Hope your right Nathan, the improved treatment of pass throughs encourages on the investment side.

So the interest rate deduction goes from 1MM to 750K.  Theoretically, how much a year would this cost someone in California?  How much of a loss will it be to not be able to deduct the interest on 250K?  Is this really that big of a deal to the budgets of people all can qualify to buy a house worth over 1MM?  Can someone help me with the math in dollars per year lost? 

@Brent Silberbauer I'm calculating the interest on that $250,000 is about $10,000 per year. So, not being able to deduct that, may cost somebody an extra $3,500 per year in taxes.

I doubt that it will have much effect on California property values.  Demand is still high, supply is still very limited, and values are still projected to appreciate in California.

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