Effects of new reduced mortgage deduction proposal? (Boston, Brookline: sales, real estate)

[audemars]

I'd be curious to hear from the realtors on here whether you're seeing any deals on hold or falling through as the result of this week's proposal to reduce the mortgage deduction from $1mm ($1.1mm including HEQ lines) to $500k.

On the surface, it should be a rounding error in the towns where $1mm mortgages are common - at a 30yr mortgage rate of 4% on $1mm the deduction would go from $40k to $20k - leading to higher taxes of $7k to $8k per year. You'd have to think the towns that get hit hardest are with the highest property tax mil rate coupled with higher prices, as that'll be capped at $10k under the current proposal. Likely more a factor for towns with rates closer to $20/thousand (Sharon/Sherborn) vs those with a rate half that (Brookline).

[sarahmccoy]

I haven’t had any deals fall through yet, but I can tell you that the national Association of Realtors and the National Association of Builders is vehemently against the proposed tax cut.

[Dm84]

If you can afford a $500k mortgage you don't need this deduction.

[Lori1210]

I'm not seeing any fall out from this news but it's too soon to tell. It's not yet approved and could change.
I honestly don't think it will affect much anyway because the market is too hot in Boston and surrounding towns. Some of the smaller towns have seen a slow down prior to the announcement.

[jayrandom]

Originally Posted by Dm84

If you can afford a $500k mortgage you don't need this deduction.

I’m sure lots have people can barely afford the $500k mortgage and will miss it. Actually everyone will miss it.

And it would be a lot easier to swallow if taxes were going up for everyone. It’s harder to sell a tax increase of this kind when it’s there to offset bigger tax reductions for those even higher up the tax bracket who need it even less.

[porterhouse]

Originally Posted by jayrandom

I’m sure lots have people can barely afford the $500k mortgage and will miss it.

If one can barely afford a $500k mortgage they shouldn't have it in the first place. If this proposed tax code change forces more responsible borrowing in that way, it's a good thing in my book. Anything more than a conforming mortgage is an ill advised risk for most people.

I would naturally expect all realtors and associations to be against this out of hand. It would ultimately have some minor impact in terms of putting the brakes on real estate appreciation, which is a good thing in my book. I don't see it as having a major impact though. Many sales in my area at the higher end are cash transactions.

Originally Posted by jayrandom

It’s harder to sell a tax increase of this kind when it’s there to offset bigger tax reductions for those even higher up the tax bracket who need it even less.

I'd be surprised if the estate tax elimination makes it through.

[bugelrex]

The tax deduction has been great, but it really has been a giveaway for the rich.

Assuming 20% down, its about a 600k home which should only be purchased if you are making just under 200k a year. These guys are still being taken care of as the deduction still applies...

Another way to phrase it: its going to hurt people making over 200k a year, and ONLY by "how expensive" a house they "choose" to buy.

Only in the twlight zone would democrats be kicking and screaming against this.. but they are.


I suspect it will drop home values around 5% ... some people get hurt, some millennials get to buy slightly cheaper. There are always winners and losers. That said, the realtors group are VERY powerful, would be surprised to see this go through

[Dm84]

Originally Posted by bugelrex

The tax deduction has been great, but it really has been a giveaway for the rich.

Assuming 20% down, its about a 600k home which should only be purchased if you are making just under 200k a year. These guys are still being taken care of as the deduction still applies...

Another way to phrase it: its going to hurt people making over 200k a year, and ONLY by "how expensive" a house they "choose" to buy.

Only in the twlight zone would democrats be kicking and screaming against this.. but they are.


I suspect it will drop home values around 5% ... some people get hurt, some millennials get to buy slightly cheaper. There are always winners and losers. That said, the realtors group are VERY powerful, would be surprised to see this go through

Democrats love raising taxes on the rich, until they realize they are rich.

[GeoffD]

In my opinion, the mortgage interest deduction should only apply to starter homes. Cap the square footage per person and the acreage. A family of 4 would only be able to claim the first 1,500 square feet and first 10,000 square feet of land. I’d phase it out completely at higher income levels. It needs to be a subsidy for young middle class families, not 3%ers buying big houses on big lots. Same thing for property tax.

[jayrandom]

Originally Posted by porterhouse

If one can barely afford a $500k mortgage they shouldn't have it in the first place. If this proposed tax code change forces more responsible borrowing in that way, it's a good thing in my book. Anything more than a conforming mortgage is an ill advised risk for most people.

I would naturally expect all realtors and associations to be against this out of hand. It would ultimately have some minor impact in terms of putting the brakes on real estate appreciation, which is a good thing in my book. I don't see it as having a major impact though. Many sales in my area at the higher end are cash transactions.


I'd be surprised if the estate tax elimination makes it through.

I'm totally on board with getting rid of the deduction, either with just a lower limit or entirely. It's just a harder pill to swallow when overall tax collections are going to go way down. This is a tax cut for the ultra-rich at the expense of the just ordinary rich. The point is a tax cut for the ultra-rich and business onwers. I don't see that aspect of this bill going away.