The National Association of REALTORS® (NAR) acknowledges the that the current tax system is complex and is looking for ways to assure that tax reforms support the goals of homeownership and the freedom to buy, keep and sell real estate.
Under current tax laws, a deduction for mortgage interest paid are allowed for homeowners, generally for interest paid on mortgage debt of up to $1 million, and the deduction is available for interest on mortgages for a principal residence plus an additional residence. This $1 million limitation represents the combined allowable debt on two residences.
Tax reform has been a strong topic for many years now, even though that term has a generally different meaning for Democrats and Republicans. As part of its budgets for several years, the Obama Administration proposed reducing the value of all itemized deductions (including the mortgage interest deduction (MID)) for higher-income taxpayers.
In mid-2016, House Speaker Paul Ryan (R-WI) and Ways and Means Chairman Kevin Brady (R-TX) released a fairly comprehensive tax reform plan outline, the “Blueprint”, that would almost double the standard deduction and eliminate the deduction for state and local taxes paid, along with other itemized deductions, except the MID and the deduction for charitable contributions. The Blueprint wasn't taken very seriously by policy-watchers up until the results of the 2016 election were known. Now that President Trump has endorsed most of the goals and major provisions of the Blueprint plan, REALTORS® are on high alert that tax reform could threaten most of the tax benefits of owning a home.