A proposal by House Republicans to overhaul U.S. tax law is gaining traction, aided by the certainty of the Trump Administration. Included among the proposed reforms are changes that could bring an end to a key benefit of home ownership.
"The real-estate industry has long known it would face a fight in 2017 about how federal tax law applies to commercial and residential property," according to an article by Peter Grant and Laura Kusisto. The spectrum and focus of those tax reforms shifted greatly, however, when Donald Trump was unexpectedly elected president.
The article goes on to survey of a comprehensive list of concerns from real estate industry executives in response to a Republican proposal to overhaul U.S. tax law, originating from the House of Representatives in June 2016. The article cites Jeffrey DeBoer, chief executive of the Real Estate Roundtable, while discussing several specific proposals from the Republican tax plan.
Among other things, the GOP blueprint calls for the elimination of the deduction for state and local property tax. Industry executives also worry the plan could severely cripple the mortgage interest deduction—long considered a sacred cow of U.S. tax policy.
According to the article's explanation of the proposed changes to the mortgage interest deduction, Republicans would double the standard deduction, which would then disincentivize itemized deductions (like the mortgage interest deduction), which would, in turn, disincentivize home ownership.
The proposal would also eliminate the current deduction for debt interest payments for all businesses, which enables "acquisitions of office buildings, stores, hotels and other commercial property," according to the article. Finally, the plan would "eliminate depreciation for real-estate companies as well as other businesses."
FULL STORY: Real-Estate Industry Braces for Tax Upheaval
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