President Trumps proposed tax plan would double the standard deduction, effectively invalidating the tax benefits of owning a home. National Association of REALTORS® (NAR) President Bill Brown said, “The mortgage interest deduction and the state and local tax deduction make homeownership more affordable, while 1031 like-kind exchanges help investors keep inventory on the market and money flowing to local communities. Those tax incentives are at risk in the plan released.” Brown said that the plan puts at risk the investment of approximately 75 million homeowners across the country and would put barriers in place for prospective homebuyers and investors.
“Doubling the standard deduction could severely marginalize the mortgage interest deduction, which would reduce housing demand and lead to lower home values,” said National Association of Home Builders (NAHB) Chairman Granger MacDonald.
Some of the Key Elements of the Trump Proposal Are:
- Reducing the current seven tax brackets (10%, 15%, 25%, 28%, 33%, 35%, 39.6%) to three: 10%, 25% and 35%.
- Doubling the standard deduction. The White House explains this would allow a married couple to have a 0% tax rate on the first $24,000 they earn. The current standard deduction is $6,300 for single filers and $12,600 for married couples.
- Repeal the Alternative Minimum Tax (AMT).
- Return the top tax rate on capital gains and dividends to no higher than 20% by repealing the 3.8% Obamacare tax. The current maximum capital gains tax is 28%.
- Repeal the Estate or Death Tax, which taxes estate property that is valued at more than $5.4 million.
- Reduce the corporate tax rate from the top rate of 39% to a maximum of 15%.
- Most tax deductions would be eliminated with the exception of home ownership (Mortgage Interest Deduction), charitable giving and retirement savings, which would be protected under the Trump plan. State and local tax deductions would be targeted for elimination.
The non-partisan Committee for a Responsible Federal Budget estimated that the Trump plan could cost $3 trillion to $7 trillion over the next 10 years. If the current plan goes through, guess who will pay for those costs; homeowners, prospective buyers and investors. Call your representative and be heard.
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