The Tax Cuts and Jobs Act – The 2017 Tax Reform Bill
The Republican leadership in the House released its long-awaited bill to reform the nation’s tax code, the “Tax Cuts and Jobs Act.”
There are a lot of details tucked in a lengthy bill, that will be exposed and litigated publicly in the coming days, but for now, most GOP members, representing a variety of constituencies and interests, seemed to agree that the plan was a half-decent start.
With its release comes concern for middle-class homeowners. Limits on the mortgage interest deduction and the deductions for property taxes and state and local taxes will likely be affected. Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford and this bill is nowhere near as good as the one under the current law.
Based on a preliminary look at a summary of the bill, the MID cap would not affect current homeowners, but people who would become homeowners later would only be able to claim the MID to the extent the mortgage on their primary residence is $500,000 or less. The current limit is $1 million.
In another provision, hurdles would be added to the capital gains exclusion most home sellers can take on the sale of their principal residence. Currently, the limit is $500,000 for a married couple filing jointly. The bill would eliminate the deduction for state and local income taxes. And while taxpayers would continue to have the option to deduct their property taxes, the deduction would be capped at $10,000.
Other areas the legislation tackles are:
State and local deductions
Child tax credit
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