The tax-code overhaul wipes out decades-old perks designed to encourage homeownership.
"There's really no difference between owning and renting in the tax code anymore for most Americans," said Ed Mills, a Washington policy analyst at financial-services firm Raymond James & Associates.
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At least 23 million fewer U.S. homeowners will be incentivized to buy a home under the new rules, according to home-search website Zillow. The share of homeowners who are likely to itemize and therefore take advantage of the mortgage-interest deduction is expected to decline to about 14% from about 44%, according to Zillow.
At peak impact, U.S. home prices will be about 4% lower in the summer of 2019 than if there had been no tax changes, according to an analysis by Moody's Analytics. Similarly, in pricier markets in states like New Jersey, New York, Illinois and Pennsylvania, prices could be as much as 10% lower, according to Moody's.
The National Association of Realtors, one of the largest and wealthiest lobby groups in the U.S., lobbied vigorously and unsuccessfully against the changes. Housing lobbyists said they first spotted trouble when a 2014 Republican blueprint from then-Chairman of the House Ways and Means Dave Camp proposed to nearly double the standard deduction. It neutered the mortgage-interest deduction by ensuring the vast majority of households no longer would be incentivized to itemize their tax returns.
But it was hard to argue against what likely would amount to a tax break for many Americans.
"When you increase the standard deduction, many, many fewer taxpayers are going to itemize, and the ones that do are only going to be the very wealthy," said Jerry Howard, chief executive of the National Association of Home Builders.
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(END) Dow Jones Newswires
December 20, 2017 05:44 ET (10:44 GMT)