A new nationwide consumer survey from realtor.com® shows that the Tax Cuts and Jobs Act passed by Congress on Dec. 20 is raising anxiety about owning a home, with a majority of respondents reporting that the tax bill makes them either “concerned” (36.2 percent) or “very concerned” (17.2 percent) about being a homeowner.
In contrast, approximately a quarter of respondents said that the bill makes them feel “positive” (15.0 percent) or “very positive” (7.2 percent) about home ownership. Only 22.9 percent said that the tax bill would not change their plans to purchase, while 57.1 percent said that the bill would not change their plans to sell.
The Tax Cuts and Jobs Act will provide many people with higher after-tax incomes, which is expected to put upward pressure on home prices and mortgage rates. It caps the mortgage interest rate deduction at $750,000 and increases the standard deduction, which will eliminate the tax benefits of homeownership for many people and could decrease sales and home prices in expensive areas.
“The bill will have a significant impact on the housing market and overall economy, so it makes sense that people are wondering what it means to them,” said realtor.com® Senior Economist Joseph Kirchner, Ph.D. “Some house hunters – particularly wealthy buyers – will see an increase in after-tax income making an already tough housing market even more competitive.
This increased demand could drive prices up even higher than they are already. And changes in the deductibility of mortgage interest and state and local taxes could cause challenges for many home owners.”
Full results of the survey are available upon request. The findings are part of an online survey of 2,324 randomly selected online respondents across the U.S. conducted on behalf of realtor.com® between Dec. 18 and 19.
Most and least favored aspects of the bill:
Nearly doubling the standard deduction and increase child tax credits: 26.1 percent positive, 25.4 percent very positive
·Elimination of the mortgage interest rate deduction on second homes: 12.4 percent very positive, 18.5 percent positive
·Elimination of the deduction for personal casualty losses: 36.4 percent very negative, 20.1 percent negative
The bill will increase the deficit by $1.5 trillion over 10 years, according to the Joint Committee on Taxation: 37.6 percent very negative, 13.8 percent negative.