New Reports Suggest Mortgage Interest Deduction Cap Reconciled in Republican Tax Plan
Under a reconciled GOP tax plan capping the mortgage interest deduction at $750,000, the proportion of homes worth enough for homeowners to itemize deductions would drop 31.5 percent to 12.5 percent.
The reconciled version is up from a $500,000 cap in the original House bill, but down from the $1 million cap in current law and in the Senate version of the bill. According to Zillow, the new bill would likely discourage many individual filers from itemizing deductions, getting rid of the need to claim mortgage interest deduction. More homeowners are likely to choose to take the larger standard deduction.
It isn’t just the faster-moving, pricier coastal housing markets impacted by the tax overhaul. With the proposed changes, the fraction of homes in Cuyahoga County, Ohio (essentially the city of Cleveland and immediate suburbs), worth enough for taking MID to feasibly be a better deal drops from 21 percent to 3 percent.
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