News | Finance: How Trump's new tax law affects homeowners at every income level from $83,000 to $336,000 a year

Finance: How Trump's new tax law affects homeowners at every income level from $83,000 to $336,000 a year

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  • President Donald Trump signed the Republican tax bill into law in December 2017.
  • The new tax law changes the mortgage interest and property tax deduction, potentially making homeownership less attractive in the long run.
  • Homeowners in expensive coastal cities will likely see the biggest loss of tax deductions, according to one housing economist's projections.

President Donald Trump signed the Republican tax bill into law at the end of December.

The new tax law makes sweeping changes to the tax code for businesses and, on average, American taxpayers. It changes a few longstanding tax benefits for homeowners, too.

Under the new law, the deduction for state and local property taxes is capped at $10,000. Plus, homeowners who deduct mortgage interest are limited to the amount they pay on $750,000 worth of debt, down from $1 million. On the flip side, the standard deduction has doubled, likely leading fewer homeowners to itemize their taxes.

These changes may weaken incentives for homeownership, especially in expensive coastal markets in California and the Northeast where home prices are high and residents pay state taxes on income as well as property. Homeowners in these markets will see the biggest change in their housing-related tax deductions.

"The impact of the changes is felt disproportionately in left-leaning parts of the country," writes Chris Salviati, a housing economist at Apartment List, in a new report. "There are 15 states in which the median homeowner will receive at least $100 less in housing tax deductions under the new plan — President Trump carried none of these states in the 2016 election."

Apartment List analyzed the affect of Trump's new tax law on homeowners with home values below, at, and above the median in the largest metros in the US. They estimated the overall tax bill for a married couple filing jointly with a dependent child under the previous tax code and the new tax code.

In much of the US, only owners of the most expensive homes in a local market will see a loss in housing tax deductions. But on the California coast and along the Northeastern seaboard, most homeowners — even those with homes valued below the median — will lose deductions they had pre-tax reform.

For homeowners of a median-priced house in the Bay Area, the loss of mortgage interest and property tax deductions could total more than $100,000 over the course of a 30-year mortgage, according to Salviati's calculations. The estimation does not factor in projected home price changes over that time period, however.

Below, we've listed the affect of Trump's tax law on homeowners of the highest-value homes — the 75th percentile — in 27 of the largest US metros, ranked by home value, using Salviati's calculations.

For each city, we've also provided estimated household income, tax deductions pre- and post-tax reform, and the total loss over a 30-year mortgage, according to the Apartment List report. We excluded places with a population below 1 million and anywhere the difference in housing tax deductions was unchanged.

Richmond: $332,400 home value

Richmond: $332,400 home valueplay

Richmond: $332,400 home value

(f11photo/Shutterstock)

Estimated income: $83,100

2017 housing tax deduction: $800

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $5,000

Las Vegas: $336,600 home value

Las Vegas: $336,600 home valueplay

Las Vegas: $336,600 home value

(iStock / Donyanedomam)

Estimated income: $84,200

2017 housing tax deduction: $500

Deduction under Trump's new tax law: $0

Nashville: $338,300 home value

Nashville: $338,300 home valueplay

Nashville: $338,300 home value

(f11photo/Shutterstock)

Estimated income: $84,600

2017 housing tax deduction: $900

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $4,000

Virginia Beach: $343,400 home value

Virginia Beach: $343,400 home valueplay

Virginia Beach: $343,400 home value

(Sherry V Smith/Shutterstock)

Estimated income: $84,900

2017 housing tax deduction: $900

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $8,000

Minneapolis: $347,800 home value

Minneapolis: $347,800 home valueplay

Minneapolis: $347,800 home value

(photo.ua/Shutterstock)

Estimated income: $87,000

2017 housing tax deduction: $1,400

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $15,000

Phoenix: $349,000 home value

Phoenix: $349,000 home valueplay

Phoenix: $349,000 home value

(Shutterstock)

Estimated income: $87,300

2017 housing tax deduction: $800

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $5,000

Hartford: $350,100 home value

Hartford: $350,100 home valueplay

Hartford: $350,100 home value

(f11photo/Shutterstock)

Estimated income: $87,500

2017 housing tax deduction: $1,500

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $24,000

Raleigh: $356,600 home value

Raleigh: $356,600 home valueplay

Raleigh: $356,600 home value

(Sean Pavone/Shutterstock)

Estimated income: $89,200

2017 housing tax deduction: $1,200

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $12,000

Chicago: $357,300 home value

Chicago: $357,300 home valueplay

Chicago: $357,300 home value

(Shutterstock)

Estimated income: $89,300

2017 housing tax deduction: $1,500

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $20,000

Philadelphia: $367,700 home value

Philadelphia: $367,700 home valueplay

Philadelphia: $367,700 home value

(Shutterstock)

Estimated income: $91,900

2017 housing tax deduction: $1,300

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $16,000

Providence: $373,000 home value

Providence: $373,000 home valueplay

Providence: $373,000 home value

(Tupungato/Shutterstock)

Estimated income: $93,300

2017 housing tax deduction: $1,500

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $21,000

Salt Lake City: $383,600 home value

Salt Lake City: $383,600 home valueplay

Salt Lake City: $383,600 home value

(Aqua Mechanical/Flickr)

Estimated income: $95,900

2017 housing tax deduction: $1,200

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $11,000

Miami: $394,800 home value

Miami: $394,800 home valueplay

Miami: $394,800 home value

(pisaphotography/Shutterstock)

Estimated income: $98,700

2017 housing tax deduction: $1,000

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $6,000

Austin: $399,300 home value

Austin: $399,300 home valueplay

Austin: $399,300 home value

(RoschetzkyIstockPhoto/iStock)

Estimated income: $99,800

2017 housing tax deduction: $1,500

Deduction under Trump's new tax law: $0

Total loss over 30-year mortgage: $15,000

Baltimore: $438,000 home value

Baltimore: $438,000 home valueplay

Baltimore: $438,000 home value

(Jon Bilous/Shutterstock)

Estimated income: $109,500

2017 housing tax deduction: $1,800

Deduction under Trump's new tax law: $100

Total loss over 30-year mortgage: $25,000

Riverside: $439,100 home value

Riverside: $439,100 home valueplay

Riverside: $439,100 home value

(Shutterstock/Jon Bilous)

Estimated income: $439,100

2017 housing tax deduction: $2,100

Deduction under Trump's new tax law: $700

Total loss over 30-year mortgage: $27,000

Portland: $473,200 home value

Portland: $473,200 home valueplay

Portland: $473,200 home value

(Jon Bilous/Shutterstock)

Estimated income: $118,300

2017 housing tax deduction: $2,600

Deduction under Trump's new tax law: $1,000

Total loss over 30-year mortgage: $32,000

Denver: $480,600 home value

Denver: $480,600 home valueplay

Denver: $480,600 home value

(Andrew Zarivny/Shutterstock)

Estimated income: $120,200

2017 housing tax deduction: $3,300

Deduction under Trump's new tax law: $500

Total loss over 30-year mortgage: $21,000

Sacramento: $500,600 home value

Sacramento: $500,600 home valueplay

Sacramento: $500,600 home value

(Andrew Zarivny/Shutterstock)

Estimated income: $125,200

2017 housing tax deduction: $4,600

Deduction under Trump's new tax law: $1,200

Total loss over 30-year mortgage: $42,000

Seattle: $616,700 home value

Seattle: $616,700 home valueplay

Seattle: $616,700 home value

(Rob van Esch/Shutterstock)

Estimated income: $154,200

2017 housing tax deduction: $4,300

Deduction under Trump's new tax law: $1,300

Total loss over 30-year mortgage: $41,000

Boston: $619,500 home value

Boston: $619,500 home valueplay

Boston: $619,500 home value

(Jorge Salcedo/Shutterstock)

Estimated income: $154,900

2017 housing tax deduction: $6,200

Deduction under Trump's new tax law: $2,300

Total loss over 30-year mortgage: $84,000

Washington DC: $635,100 home value

Washington DC: $635,100 home valueplay

Washington DC: $635,100 home value

(Orhan Cam/Shutterstock)

Estimated income: $158,000

2017 housing tax deduction: $5,800

Deduction under Trump's new tax law: $2,400

Total loss over 30-year mortgage: $78,000

New York: $655,600 home value

New York: $655,600 home valueplay

New York: $655,600 home value

(Stig Ottesen/Unsplash)

Estimated income: $163,900

2017 housing tax deduction: $7,400

Deduction under Trump's new tax law: $2,600

Total loss over 30-year mortgage: $115,000

San Diego: $736,900 home value

San Diego: $736,900 home valueplay

San Diego: $736,900 home value

(Shutterstock)

Estimated income: $184,200

2017 housing tax deduction: $7,700

Deduction under Trump's new tax law: $3,300

Total loss over 30-year mortgage: $110,000

Los Angeles: $827,900 home value

Los Angeles: $827,900 home valueplay

Los Angeles: $827,900 home value

(TierneyMJ/Shutterstock)

Estimated income: $207,000

2017 housing tax deduction: $8,600

Deduction under Trump's new tax law: $4,000

Total loss over 30-year mortgage: $114,000

San Francisco: $1,140,700 home value

San Francisco: $1,140,700 home valueplay

San Francisco: $1,140,700 home value

(canadastock/Shutterstock)

Estimated income: $285,200

2017 housing tax deduction: $13,300

Deduction under Trump's new tax law: $5,300

Total loss over 30-year mortgage: $145,000

San Jose: $1,343,600 home value

San Jose: $1,343,600 home valueplay

San Jose: $1,343,600 home value

(Uladzik Kryhin/Shutterstock)

Estimated income: $335,900

2017 housing tax deduction: $17,500

Deduction under Trump's new tax law: $4,400

Total loss over 30-year mortgage: $165,000

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By Kwame Ntow 13/03/2018 07:40:00