An article that came out November 29th in Bloomberg reviews the current proposed House Tax Plan’s proposal to cap the mortgage tax deduction to $500,000. With stats from Zillow, the article reviews current active listings in all states, and presents the finding that California, Florida, and New York would be the hardest hit.
Based on 20% down, these three states have the highest number of listings that would close with a mortgage over the proposed cap limit, and owners in those states would be the most hard hit, in terms of volume. The article does not review income rates in those states, and adjust them accordingly, however generally income and home prices do move up and down congruently, so arguably that factor shouldn’t change all that much.
The current tax plan caps at $1,000,000, favoring the middle-class, and still allowing the upper-class home-owners a generous deduction. At $500,000 the proposed plan would only benefit a very small portion of US citizen homeowners- those that live and can even qualify or afford to purchase a home, in the lower percentile of home prices. Median single family home prices in California are currently around $550,000, with the SF market topping out at a median sold home price of almost $1,600,000. See CAR Market Data for more information.