Seattle homebuyers will be among those hit hardest by lower mortgage interest deduction cap

[Yo_Mama_Been_Loggin]

One in eight Seattle-area homebuyers this year would have had their mortgage interest deduction capped at a lower level had the new federal tax code been in place when they bought their homes.

The tax bill passed by Republicans in Congress and signed into law by President Donald Trump decreased the mortgage interest deduction cap from $1 million to $750,000. Existing home loans are grandfathered in under the previous limit.

In King County, 12.8 percent of condo and single-family home purchase loans were for more than $750,000 in the first 11 months of 2017, according to a study by real estate data firm Attom Data Solutions.

That's compared to 4.8 percent of home loans in Washington state and 3.9 percent of homes for the U.S. overall.

With 3,715 such loans out of 28,975 in that time period, King County ranked behind only Los Angeles County, California (9,197); Santa Clara County, California (5,543); Orange County, California (4,450) and Maricopa County, Arizona (3,723) in the 2,022 counties included in the analysis with at least 50 home purchase loans so far in 2017.

San Juan County was second-highest in Washington state at 4.7 percent (six of 129 loans), followed by Grant County 3.9 percent (33 out of 842).

https://www.democraticunderground.com/?com=post&forum=1082

[Hoyt]

1. 1 in 8 doesn't sound too bad. Assuming a down payment of 20%, that's a $900,000+ house.

It's certainly not the area of the tax bill that most people will find disturbing.

With that said, I think some kind of indexing would have been appropriate, at least through some phase-in period.

[wasupaloopa]

2. I think nothing should be indexed if the top rate was cut. The 1% get 3/4ths of the pie and we

squabble among ourselves over the remaining 25%. That's what the repubs want to take your eyes off the ball.

[Cicada]

3. Home prices will fall to compensate for reduced deductions

The sellers will lose by getting a lower price. New buyers will not lose because the price they pay will be lower, reduced by the value of the lost tax deductions. Screws current owners, not future buyers. Those who wouldn’t itemize even as a home owner will be winners from lower prices and no loss of deductions.

[Hoyt]

4. How much do you think an extra tax cost of $1,800 per $100,000

above a $900,000+ house, will impact the property value. Not much. Besides, I think there was already a $Million limit. The property tax issue might have some impact, but we are talking about mostly people who can afford it (I get there are some exceptions in high cost areas).

Now, there is some other real junk in that tax Bill.

[Cicada]

5. The combo expected to drop home prices 1.8% nationwide, 10% in some places

[Hoyt]

6. That aint much, and I doubt it will impact those at lower end of housing market.