Dear Editor:
Mr. Akers’ article “New GOP tax plan means fewer deductions for homeowners” contains a factual inaccuracy regarding the new mortgage interest limits. It also seems to gloss over the fact that many middle and lower income taxpayers will actually have lower overall tax bills next year as a result of this new tax bill, even here in Seattle.
Mr. Akers states that “as many as two-thirds of current homeowners are likely to feel the impact.” However, it’s likely a much smaller group is affected when looking at the mortgage interest deduction taken in isolation.
For one thing, Mr. Akers incorrectly states in his article that the mortgage acquisition debt limit dropped to $500,000 for all loans. That limit actually remains at $1,000,000 on existing home acquisition loans. It drops to $750,000 on new loans incurred after 12/15/17.
For another, a loan of $750,000 plus a 20 percent down payment would be enough to buy a home worth about $938,000 (ignoring closing costs). That is well in excess of Seattle’s December 2017 median home price of $635,000.
Knowing all this, I ask Mr. Akers what percentage of existing Seattle homeowners would be affected by the new mortgage limits? What percentage of new Seattle homeowners are buying after 12/15/17? Surely much less than 67 percent?
I would also point out that the $10,000 limit on property taxes would be less of an issue if our property tax bills went down. A delusional thought, I know.
It is true that some homeowners will be worse off under the new tax law. However, it’s important to remember that mortgage interest and real estate taxes are just two elements of a taxpayer’s overall tax profile. Many other provisions of the new tax bill will help to ameliorate the new mortgage interest and property tax limitations. In fact, they may even result in an overall reduction in a middle or lower income taxpayers’ Federal income tax bill as compared to prior law. A few such provisions:
1. Increased child tax credit
2. Mostly lower tax rates
3. A 20 percent “Qualified Business Income Deduction”
4. A higher Alternative Minimum Tax exemption amount
5. A near doubling of the standard deduction
Finally, I wonder about the notion that the tax bill will deflate real estate prices. As a homeowner myself, I’m not thrilled about that idea. But it’s good to remember that not everyone in Seattle loses out if this were to happen. Affordable housing is a very hot topic in this region. I’m certain that for many Seattleites (renters and those wishing to buy a home), lower house prices would be most welcome.
Thank you.
Sincerely,
Michael B. Kleiner