Although the final bill has yet to be approved, the proposed Tax Reform bill looks to have severely detrimental effects on the California housing markets:
- Deduction of state and local taxes to be capped at $10,000 (including property taxes)> Currently, Californians average deductions of $16,000.
- Mortgage-interest deduction to be capped at $750,000. Currently the cap is at $1 million.
- New buyers would love approximately $25,000 in the first year of buying a home priced at $1.2 million. The bill hurts new homebuyers more severely than existing homeowners.