The new budget proposal has a lot of interesting items included in this Trojan horse budget proposal. The administration is proposing trimming the amount of interest that could be written off depending on income. While at first it sounds fair the reality is that those top income earners that make over $208,850 are at risk for higher taxes and itemized write offs on all fronts. Home owners in those brackets above it is proposed to limit the tax rate at which high-income taxpayers can take itemized deductions to 28 percent. For home owners in high priced markets New York, California, Boston and DC this will be a hardship. For real estate agents this will take the wind out of the sails of many buyers as home buyers become more realistic on how much home and expense they want to carry. This tax would not only limit the amount of mortgage interest that could be deducted, but also state and local property tax and charitable contributions. The amount deducted would be capped for these upper income earners (over $208,850) to 28 cents on the dollar as opposed to the current 35 cents. This will have a severe impact on real estate as we know it.
In more expensive areas where it takes a large income just to qualify for the average home because of the high cost of living... this is a major blow to those struggling to pay their mortgage, pay increasing local property tax, and other expenses. There should be a major outcry from the real estate community on this portion of the budget proposal. Legitimate deductions are being trashed while the pork in DC just grows and grows and grows! How come there are no cuts in the Federal Budget?
James Crawford ABR, Broker Associate
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