Real estate data powerhouse HouseCanary recently said that the Mortgage Deduction is “Not A Big Deal … Except Where It Is.” Okay…..so they took a look at 2017 loans (originated by MSA) that fell between $750k and $1 million to see how many would be impacted by the new tax reform laws. Among other things, they estimated that since buyers won’t be able to deduct at least part of their mortgage interest paid on a new home, this will lower overall affordability on homes priced between $750k and $1 million – which are considered luxury in most markets. They also explore the impact of lowering the SALT (state and local tax) to deduction to $10k in affected states.
“The new tax law is decreasing the amount of mortgage interest that a household can deduct on its annual taxes. Homes that closed before December 15, 2017, are “grandfathered” in, but after that date, the new limit on mortgage interest deductions dropped to $750,000 from $1 million (this limit also applies to second homes).”