The Senate bill would keep the mortgage interest deduction as is, except remove an equity debt deduction of up to $100,000. The House plan would lower the annual mortgage interest deductions to newly issued loans totaling no more than $500,000, down from $1 million right now. This is a major concern for real estate agents because homes in San Diego cost more than the rest of the nation.
As of the start of November, 3,651 out of 32,900 homes had sold in 2017 for more than $1 million in San Diego County, said ReportsOnHousing. In the same time period, 17,862 homes sold for more than $500,000.
What does that mean for buyers: Typical buyers put 10 to 20 percent down, so most San Diegans will not be affected by the deduction yet. The luxury market is another story.
What does it mean for affordability: The bills both look to nearly double the standard deduction, so people might have more money in that regard. However, both the Senate and House versions of the bill would curtail the state and local income tax deduction as they are now (the Senate version includes an amendment to allow deductions of up to $10,000 for state and local property taxes). Because taxes are high in California, it could mean less income for potential buyers.
How will millennial buyers fare: Many millennials have student loans, especially those being recruited by tech companies in California, that could prevent them from having enough money for a down payment. The House bill would remove the student loan interest deduction, which allows borrowers to get back up to $2,500 a year. The Senate bill leaves the deduction alone. There were 1.1 million student loan deduction claimants in California in 2016, said the National Association of Realtors.
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