LEGISLATIVE AFFAIRS: MID and SALT Deductions in Peril
Philip Weiden | November 7, 2017
From the onset of the discussion on “tax reform,” the House Republican leadership has said the MID (Mortgage Interest Deduction) would not be touched. We heard in news report after news report that specifically MID would not be affected. We have also heard, year after year that home ownership is important to the Republican leadership. In the tax plan proposed by the House of Representatives, this does not appear to be the case.
The House would like to cap the mortgage interest deduction at $500,000, which would send home values plummeting in the tri state area. For high cost states this would be devastating. New York, New Jersey, Connecticut and California are all dependent on the MID because real estate values are significantly higher in these states than in others. $500,000 is barely a middle class home in the suburbs of New York and the city itself.
Another devastating feature of the House bill is it proposes to cap property tax deductibility at $10,000. In New York this is obviously very low. The state and local tax deduction should not be touched at all but to peg it at such a low level and call it a compromise is disingenuous.
The House leadership is playing Russian roulette with home values. The home ownership rate is at 64%, a low for the past several years. Taking away home owner incentives for first time buyers will only serve to further diminish the home ownership rate. The plan also eliminates the state and local income tax deduction, which further diminishes the purchasing power of first time home buyers in the state of New York.
There are two things we need you to do. One is to respond to the NAR call for action that demands Congress leave the state and local income tax deductions and property tax deductions intact and the other is to call your congressperson and senator and urge them to leave the MID intact. This is urgent as the aim is to pass this legislation by the end of the year.