While the National Association of Realtors® (NAR) admits that only an estimated 1.3 percent of mortgages will be affected by the new $750,000 cap on the mortgage interest deduction, that still means that tens of thousands of high-net-worth, high-earning families will have their deduction capped.
And, the cap of $10,000 on the combination of local and state property and income taxes will cause some discomfort for homeowners (and others in states with high-income taxes). The Economy Will Get Stronger However, if history repeats itself, then like the Kennedy tax cuts of the early 1960’s, the Reagan tax cuts of the early 1980’s and the Bush tax cuts of the early 2000’s, the general economy will get stronger—more jobs and more income. With the decrease in tax rates for regular C-type corporations and new deductions for S and LLC—which will lower taxes for these entities—business owners will retain a higher share of their earnings and may choose to invest it in growing their businesses. Growth generally means more employment and the chance for higher pay for employees.
One of the big advantages is the raising of the standard deduction for young single and married households. The new deductions are $12,000 for singles and $24,000 for married households. Not only will this reduce their paperwork, but it may help young families save money faster for down payments for their own homes. And, if this tax reform does nothing else, helping young families keep more of their money—whether they use it to buy a home or pay down their student debt or whatever—will benefit
the economy and housing.
Source: Real Trends Newsletter ~ January, 2018