The end of home ownership? A look at tax changes

The probable passing of the tax overhaul bill has created a lot of dis- or mis-information. As noted at the Wall Street Journal in an article entitled "The Tax Reform Promise":

"The media are now chortling with Democrat Chuck Schumer that Republicans will “rue the day” they passed this. Actual CNN headline: “Public opposition to tax bill grows as vote approaches.” But we’d dislike this bill too if all we knew was what the media reported ". (Emphasis is mine).

A lot of self-serving people and politicians are predicting the end of the world, yet again. For homeowners or condominium owners, one "expert" was quoted in the Wall Street Journal as saying "There’s really no difference between owning and renting in the tax code anymore for most Americans.” -That's according to Ed Mills, a Washington policy analyst at financial-services firm Raymond James & Associates, in an article entitled "GOP Tax Overhaul Makes Homeownership Less Appealing".

However, the numbers show differently. For example, there is a lot of hoopla about decreasing the deduction for mortgage interest to "only" mortgage debt up to $750,000.

What's reality? According to Zillow: "The median price of homes currently listed in the United States is $259,900 while the median price of homes that sold is $225,262. The median rent price in the United States is $1,600."

Here are some things coming out about the tax bill. As usual, if you are really concerned, check with your accountant or tax professional.

The bill allows taxpayers to claim a deduction on interest on up to $750,000 of mortgage debt on a first or second home. In other words, anyone with a home mortgage at BLMH will be able to claim the interest on the mortgage. However, homeowners will no longer be able to deduct the interest paid on home-equity debt.

Under the new bill, the amount that taxpayers can deduct per return for state income or sales taxes, as well as for property taxes, is capped at $10,000. That should not pose a problem for most owners at BLMH.

"Most families with children will benefit from a rise in the standard deduction to $12,000 from $6,350 for single filers and to $24,000 from $12,700 for married couples. Many families will also see reductions in their marginal tax rate, or what they pay to the government if they earn another dollar."

According to the tax policy center: "in 2018, families with children under 17 will see tax cuts that average from $210 a year for the lowest 20% of earners—those making $20,690, on average—to $9,330 for the top 20%, earning $400,530, on average. Those in the second, third and fourth income quintiles—with average incomes of $44,460, $80,050, and $135,440—will see average tax cuts of $820, $1,420, and $2,230, respectively...".

The end of the world? Hardly.

[Addition: The "Tax Policy Center" is a liberal organization, so I am sure they really hated putting that information out. Yet politician Schumer insists the tax bill aids “only the wealthiest few” and is simply to "help the rich and hurt the middle class." Even the "Tax Policy Center" numbers don't support his absurdity.]