While hardly a done deal, the proposed tax changes in Congress would have a significant impact on first-time and Bay Area homebuyers.
- Deductions for state and local income taxes would be eliminated
- Mortgage deductions on new loans would be lowered to $500,000 down from $1 million
- Deductions on second or vacation homes would be eliminated
- Property tax deductions would be capped at $10,000
Of particular note is that limiting the mortgage to $500,000 would impact approximately 70 percent of Bay Area home sales. Buyers with a new mortgage of $1 million would stand to lose $20,000 in deductible mortgage interest in the first year alone.