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New tax law expected to slow rise of home values, creating winners and losers

Posted on Tuesday, January 2, 2018 at 9:53 am

(Washington Post)

The steady increase in housing prices in many of the nation’s priciest markets, including the Washington region, is expected to slow in coming years, analysts say, as the Republican tax law begins to reshape a major part of the U.S. economy.
For generations, the tax code has subsidized homeownership, particularly for people in the ­upper middle class and beyond. The Republican tax legislation, however, pushed in the opposite direction, scaling back subsidies once thought untouchable.
To pay for other tax cuts benefiting individuals and corporations, the GOP tax plan trims the mortgage interest deduction and property tax deduction, which combined allow some homeowners to take tens of thousands of dollars off their taxable income.
The law allows interest to be deducted on mortgages only worth up to $750,000, instead of the previously existing $1 million limit (people who got loans before Dec. 15 are grandfathered into the $1 million limit). It also put a $10,000 cap on the amount of state and local taxes, including property taxes, that can be deducted from the federal return.