California Homeowners Bad News
Yesterday morning, the U.S. Senate, by a vote of 51-49, passed legislation that would change the face of homeownership in this country for decades to come. The House passed its own version of tax reform Nov. 16,2017.
A last-minute change to the Senate version would make up to $10,000 in property taxes deductible for the small number of homeowners who would still be itemizing. Previously, the Senate version had eliminated the property tax deduction entirely. The change aligns with the property tax cap set in the House bill. One difference between the two bills is that the Senate version retains the deductibility of mortgage interest payments on up to $1 million of indebtedness; the House version caps indebtedness at $500,000 (again, for the small minority still itemizing).
Now, members of the Senate and the House must meet to agree on a final bill. It’s not too late to make your voice heard.
Join us in telling your members of Congress that incentives for homeownership and the capital gains tax exclusion on the sale of a home MUST be protected.
The original House bill would have scrapped most itemized deductions, including those for medical expenses and student loan interest. The charitable giving deduction would be left unchanged, as would the mortgage interest deduction for existing homes. But, new home mortgages would be subject to a lower cap: married couples can currently deduct interest on mortgages worth up to $1,000,000; that would fall to $500,000.
The House an Senate bills would both cap the deduction for state and local property taxes at $10,000 and scrap the deduction for state and local income and sales taxes. The state and local tax (SALT) deduction disproportionately benefits high earners, who are more likely to itemize, and taxpayers in Democratic states.
If the conference committee reconciles the two versions, Congress votes on the final bill. Leaders want to send it to President Trump before Christmas. Now, that’s a very ambitious deadline. usually the reconciliation process between House and Senate bills would last until January 2018.
For more information about both the Senate and House bills, there was a good article that came out yesterday on the Forbes website.