The new tax law wiped out a number of benefits of home ownership, which is vexing the National Association of Realtors.
You can still write off the mortgage interest on your primary mortgage. But there are hoops to jump through and records to keep for deductibility of HELOC’s.
Also in high property tax states like Illinois the itemized deduction is limited to $10,000 for state taxes, local taxes and property taxes. So most people will not be allowed the full deductibility of the taxes they have paid. The higher Standard Deduction coupled with the tax limitation will mean that most people will switch away from itemization.
This can and probably will have a negative impact on the valuation of homes. With little to no checks in how property taxes are assessed and billed, one of the few drivers was the deductibility of these expenses on federal tax returns. So I expect home ownership will be no less desirable to those who currently only rent. My kids want no permanency in their lives to Illinois, I am certain they are not alone in their thinking.
In Illinois we have seen a significant impact property taxes on both residential and commercial property owners, taxes continue to only going up. In spite of minimal or non-existent sales price increases (I know lots of owners who are currently underwater), the assessing authorities will nonetheless continue to raise the assessments and taxes, if for no other reason than to help balance the budget. They no longer have the “soda tax” in place so the revenue needs to come from somewhere. How else can they balance the budget…