OK OK, this is only Day 1 and the ink isn't even dry yet on the congressional tax reform proposal.
I've had clients and friends asking for days about it, and I'm getting new inquiries already.
So I'll ask: What are YOU saying to clients about the potential impact on housing markets from this proposal?
And, just as importantly, WHERE will you look for guidance on what to say, as the next few days unfold?
Please share in the comments. We can all learn from one another.
I think a fair summary of the housing-related portions of the bill, as presented today, is:
1) doubling of the standard deduction,
2) halving of the mortgage interest deduction from $1 million to $500,000 (for future purchases), and
3) capping the property tax deduction at $10,000.
Some of the first commentary we are seeing suggests that doubling the standard deduction will drastically reduce the incentive to itemize and claim MID benefits.
The MID reduction and property tax cap may disproportionately affect people in higher-priced markets. (My Manhattan Beach, CA, clients could feel it.)
Will these changes actually affect buyer behavior and home values, though?
Some of our real estate representatives and allies think so.
NAR has posted a statement from President William E. Brown:
"We are currently reviewing the details of the tax proposal released today, but at first glance it appears to confirm many of our biggest concerns about the Unified Framework. Eliminating or nullifying the tax incentives for homeownership puts home values and middle class homeowners at risk, and from a cursory examination this legislation appears to do just that. We will have additional details upon a more thorough reading of the bill."
NAR has commented on similar, past bills here.
Also, the National Association of Homebuilders has already decided to fight the bill. Jerry Howard, chief executive of the group, told the New York Times: “It puts such severe limitations on home buyers ability to use the mortgage interest deduction that home values will fall.”
So... yikes. You can see why our clients will be asking.
I'm not aiming to start a political conversation. There are plenty of places for that.
I am wondering how you will advise your clients, and where you'll get the information you'll use.