Hard to say... but I doubt it... it's rare that I hear someone say they are buying for the tax deductions... it seems it's a beneficial by-product, but not the driving force. In any event, time will tell.

No crystal ball here, but there are plenty of cash buyers out there for top end real estate, and that may help hold the valuations. In addition, isn't the total proposed tax policy suppose to lower the overall Federal income tax bill despite taking away some deductions?

Disclaimer: Not a CPA here, haven't studied the proposed tax policies.

Great question for a tax attorney. 

I doubt it.  The rich will continue to purchase expensive homes regardless of the tax deductibility of the property, in my opinion.

 No. 

Dont worry, those folks who are writing the rules make most of their money from folks with multimillion dollar homes.

I don't believe so.  Most people purchase a home for other reasons.  The interest deduction is just an added benefit.  

Well, that will certain curb things for the 'rich' & investors. Maybe this is a good thing as it evens up the advantages to the little guy? 

$500K on a house is really no big deal now.

Caroline,

I am with Nina Hollander on this one.  A

In our area there are few 500K mortgage debt. Assuming it is 1M mortgage with $40K interest reduction LOSS, why bother to own? 

The investors can now unload their homes in 1 weekend while taking 2 months to find a tenant. No one wants to move into the pricy area from outside. There will be more used housings to purchase.  This is goodness for local housing shortage. Rent will be managible.

I think it will not have an impact on values, but perhaps on IF people buy second homes

Wait to see what if anything they get done. Every special interest in the country is on alert.

Too early to tell. Inman has a good article about it. But the proposal has been out for six hours, not enough to develop models and what-if scenarios.

Here's the link:

Trump tax plan unveiled, wealthy homeowners to pay more

No idea...

Great question and great answers. 

I think it will impact our investors and first-time home buyers. That's a major plug for convincing renters to move towards homeownership...and in the Charlotte area, they're not financing over $500K (investors or first-timers).

As for values...if demand is down, supply will rise and yes, prices will retreat. That is, IF this deduction has a negative impact on those purchasing under the threshold.

Yes, here I believe it will have an impact.  The median for our county is $650,000 and average around 800,000.  Obviously many neighborhoods here are much higher.  Many of the towns I work in have median of $1 million or more (average is higher).

But, here's the a potential for huge double whammy...which is why it can be extra damaging.  Property taxes are high (what's up w/ $10,000?)...I would venture that the average for the county is much higher - maybe $15,000-20,000?  Many towns have avg of $30,000-$40,000.  And, then what the heck on double taxation on state income taxes which is also very high here.

Yes, I was just thinking about all these extra people wanting to sell this/next year.  Right now, the $1million + part of market is struggling...now, what about the $500,00-$800,000. 

Not good news for New Yorkers.

They really need to fix double taxation + raise the limits by state...just like they do for the jumbo loans.  Ridiculous.

I do not believe so.  Rents are sky high and the deduction for a rental is far less.  

More people will move to Florida!  

Time will tell.  The NAR is a very powerful lobby.   I don't think the tax benefits while important are the primary reason for the purchase of a home for most people.  

Probably.

Caroline Gerardo It might have n impact in certain areas you described.

People will gripe and life will go on!

I suspect not.  People like the deduction but don't necessarily buy for that reason

We've never had the interest deduction up here and it has no impact.  Most of my million $ home Buyers are cash Buyers.  Taxes and energy costs don't enter into their decision

On Kauai it is rare to find a decent home under $500,000, even a small one. $650,000 and up is our norm and many near or just above a million that are not homes of the uber-rich. If this tax plan goes through without change it will really hurt regular middle class homeowners here. I don't see anything near term that will lower our values but without the tax incentive to help buyers afford the big mortgage fewer people will be able to buy here. Very bad for our middle class!

I heard it said at NAR today that they think some areas may suffer a 10% loss of values. I don't believe that as I think people buy real estate for many more reasons than just having a tax deduction.

I agree with Nina Hollander and as an investor, tax deductions are just one line in the CAP rate calculation I consider.

Don't think so. The burden on upper middle class will increase.

If the real estate acquired for 1 million dollars represents the top 1% of the housing market, there will be no change.

If the real estate acquired for 1 million dollars represents the average price, there will be a period of depressed sales UNTIL, like we did in 2010, agents, investors, attorneys and lenders create new solutions.

Usually, these are existing solutions ready to be re-purposed.

I doubt.

I think this could happen, government needs to look at not messing with taxes deduction on Real Estate!

I think my buyers purchase a home to OWN a home, not necessarily for the deductions.   They were just icing on the cake.  At least sure hope so.

I doubt CA volume of sales will decrease based solely on this factor. 

I don't think so, but many buyers will be very unhappy and perhaps some may even dump their second homes. I doubt it though

I don't see it impacting values, at least according to economists I've listened to who've read the bill.

They may, a little.

Caroline Gerardo If you can afford a home over 1 million dollars, I don't think the concern should be over a tax credit. Home ownership still beats renting.

I doubt it - the majority of homes are less than that threshold IMO

Very unlikly, one is not correlated to the other. I think this notion that values will decrease in that price range is pure BS.

I doubt it, those with million dollar homes are not scraping by. They do not need a mortgage deduction anyway as they wil deduct it somewhere else in most cases.  It is funny because the dems wanted to keep tax breaks from the rich and then cry when the Gop cut the deduction from a million to 500k. 

Do not know.

I don't think it will have as big an impact as some predict. It certainly won't hurt your bottom line any worse than the "Affordable" Care Act.

Not sure yet, I am still processing. I do not think the "desire to own real estate" will diminish. We shall see.

Lynnea Miller nailed this one!

I don't think so