Tags: tax plan | tax reform | mortgage deduction | wealthy

WSJ on Tax Plan: Mortgage Deduction Irrelevant for all but Wealthiest

WSJ on Tax Plan: Mortgage Deduction Irrelevant for all but Wealthiest

By    |   Monday, 16 October 2017 03:40 PM

The Republican tax plan could make the mortgage interest deduction obsolete for all but the most wealthy of taxpayers, The Wall Street Journal reports.

"But while the mortgage deduction doesn't face extinction, it might face irrelevance," writes the Journal's Laura Kusisto. "That is because the tax plan also would almost double the standard deduction for individuals and couples, meaning only the highest earners would continue to itemize their deductions, and only a few of them would take the mortgage break. For most taxpayers, the standard deduction is likely to be the better option."

According to analysis from online real estate search engine Zillow, "currently, a little less than a third (29 percent) of all U.S. homes are valuable enough to make taking the Mortgage Interest Deduction (MID) worthwhile for tax filers. Under recently proposed tax changes, that number would fall to just 5 percent."

Under today's law, homeowners must buy a house worth at minimum $305,000 to get the full benefit of the tax break, but in the GOP's plan that amount would just almost three times to $801,000. Even in two of the most expensive real estate markets in the U.S., few homeowners would take the MID over the standard deduction. In San Francisco, the percentage of people who take the mortgage break would drop from 98.5 percent to 59 percent, while in Boston that number would fall from 79 percent to 14 percent.

"You're simply subsidizing really expensive housing markets where people probably aren't buying first-time homes," Zillow's head economist Svenja Gudell told the Journal.

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Politics
The Republican tax plan could make the mortgage interest deduction obsolete for all but the most wealthy of taxpayers, The Wall Street Journal reports.
tax plan, tax reform, mortgage deduction, wealthy
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2017-40-16
Monday, 16 October 2017 03:40 PM
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