President Trump has proposed tax policy change that has the potential to make home ownership less attractive for many Americans. The proposal would increase the standard income tax deduction to a point where only the wealthiest Americans would benefit by taking itemized deductions instead.
Under the proposed plan, the standard deduction for married couple filing jointly would jump from $12,700 to $24,000. Bloomberg reports that a couple would need to have a mortgage of about $608,000 before it would be worth it to take the itemized deduction instead of the standard one. That means that 25 million homeowners who currently itemize deductions would no longer do so on the new plan.
Without the lure of deducting mortgage interest, home ownership could lose some of its luster–all the more because Trump’s plan also proposes to eliminate deductions for state and local property taxes. With fewer people deciding to buy homes, demand could drop, lowering home prices overall. While lowered prices could be a boon for would-be buyers, the loss of the incentive of the mortgage tax deduction may dampen Americans’ appetite for buying; even if they don’t end up spending more on taxes through the standard deduction than they did with the mortgage interest deduction.
Trump’s proposal is still just that: a proposal. It remains to be seen how it will fare in Congress. If the changes take place, the new tax plan will likely have the greatest impact on renters who are looking to move to home ownership.