Enacted in 2017, the Tax Cuts and Jobs Act reduced tax breaks for homeowners. At the time, many in the real estate industry expected the changes to negatively impact the housing market, particularly in high-priced neighborhoods. The industry concern primarily focused on two specific changes included in the bill: the mortgage interest deduction was limited to loans of $750,000 or less, down from a previous cap of $1 million, and the deduction for state and local (property) taxes was capped at $10,000.
However, 16 months after the tax law took effect, the housing market remains healthy and it is difficult to find signs that the tax changes have impacted housing. Nationally, house prices have continued to rise. Median house prices have increased nearly 5 percent since the law was implemented, according to DataTree by First American data. The limited deductibility of State and Local Taxes has not impacted the housing market nationally because the cap remains high enough, so most homeowners can still deduct all of their state and local taxes.
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