$1.5 Trillion GOP Tax Bill Signed By Trump – Housing Largely Uneffected Thanks To Lower Marginal Tax Rates

By Anthony B. Sanders

President Trump on Friday signed the Republican $1.5 trillion tax overhaul that is expected to trigger tax cuts for most Americans next year. The GOP/Trump bill undoes some of the damage caused by the tax increases put in place on January 1, 2015 by the Obamacare legislation such as increasing the top bracket from 35% to 39.6%.

Although this is not related to housing per se, the corporate tax rate has been cut to 21%, putting the US in the middle of the G-7 nations instead of being the most heavily tax major nation on earth.


Remains deductible for those who itemize, but for new mortgages on first and second homes, only the interest on the first $750,000 borrowed is deductible. The interest on home equity loans will no longer be deductible.

Repealed for corporations. Remains for individuals, but exemption increased to $1 million for couples.

Student loan interest would continue to be deductible. The deferred tuition provided to graduate students who teach or the children of university employees would not be taxable.

Personal Exemptions ELIMINATED
Personal exemptions, which in 2017 reduce taxable income by $4,050 each for taxpayers, spouses and dependent children, are eliminated.

Standard Deduction RAISED
The standard deduction, from $12,700 this year to $24,000 next year for couples filing jointly. For individuals, the amount goes from $6,350 to $12,000. The additional standard deduction for the elderly and the blind is unchanged.

State and local tax deduction (SALT) CAPPED AT $10,000
New maximum of $10,000 for a combination of property and income taxes or property and sales taxes.

Obamacare Tax Penalty REPEALED
Starting in 2019, the Affordable Care Act mandate that people have insurance or face a fine imposed by the IRS would be repealed.

Tax brackets and rates TOP BRACKET LOWERED TO 37% FROM 39.6%
10% on the first $19,050 of income for couples and $9,525 for individuals
12% above $19,050 for couples and $9,525 for individuals
22% above $77,400 for couples and $38,700 for individuals
24% above $165,000 for couples and $82,500 for individuals
32% above $315,000 for couples and $157,500 for individuals
35% above $400,000 for couples and $200,000 for individuals
37% above $600,000 for couples and $500,000 for individuals

So, the bottom line is that for renters, the standard deduction has been almost doubled to $24,000.  This is only appropriate since the value of US aparments has over doubled since 2010 with The Fed’s extreme low rate policies.


Since mortgage interest and property taxes remain the largest deduction for many household that own a home, the tax changes are net beneficial below the $750,000 level on mortgage interest due to the decline in the marginal tax brackets. Of course, high home price areas like Seattle, San Francisco, Los Angeles, San Diego and New York City will feel a pinch if mortgage financing exceeds the cap.


In other words, most middle class Americans will be okay.

Say, can we tax The Federal Reserve for helping drive up home and apartment prices making housing less affordable? US housing is simply unaffordable for many households.

But here is a video of the typical debate over the tax legislation in the New York Times, Washington Post, CNN and MSNBC. And by House Minority Leader Nancy Pelosi.


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