Politics & Government
GOP Tax Overhaul: How N.C. Homeowners Will Be Affected
It could cause a double-digit decrease in sale prices in pricier areas, and cost many N.C. home buyers their mortgage interest deduction.
The U.S. House of Representatives approved the GOP tax bill once again Wednesday, the last step in Congress for the legislation before it heads to the President Donald Trump's desk. Multiple reports say the legislation will impact the housing market and a report from Moody's estimates that provisions in the bill will reduce house prices, causing double-digit decreases in some areas, including parts of North Carolina.
The GOP tax plan caps the mortgage interest deduction (MID) at $750,000 and limits the state, local and property tax deduction to $10,000. Under current law, interest paid on up to $1 million in mortgage loans can be deducted.
Current mortgages are not affected by the tax plan, but home buyers in many North Carolina counties will be affected by the plan, which Trump planned to sign in a televised ceremony Wednesday afternoon.
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An analysis by Zillow notes that the plan would leave only one in seven U.S. homes eligible for the mortgage interest deduction. In North Carolina, the percentage of eligible homes will drop significantly. In Mecklenburg County, it will fall from more than 44 percent to just 10.6 percent; in Wake, it drops from 61.92 percent to 10.03 percent; and in Cabarrus County, the number of eligible homes falls from 28.07 percent to just 1.88 percent, according to the report.
| Currently Eligible | Eligible Under New Law | County |
|---|---|---|
| 8.47% | 0.55% | Alamance |
| 26.26% | 4.15% | Brunswick |
| 44.24% | 8.10% | Buncombe |
| 28.07% | 1.88% | Cabarrus |
| 5.18% | 0.67% | Caldwell |
| 36.45% | 7.78% | Carteret |
| 12.20% | 2.55% | Catawba |
| 40.66% | 8.71% | Chatham |
| 3.68% | 0.43% | Cleveland |
| 9.66% | 0.93% | Craven |
| 6.35% | 0.48% | Cumberland |
| 7.54% | 0.54% | Davidson |
| 36.97% | 4.58% | Durham |
| 13.98% | 2.67% | Forsyth |
| 11.20% | 1.11% | Gaston |
| 16.58% | 2.40% | Guilford |
| 6.79% | 0.26% | Harnett |
| 27.25% | 4.00% | Henderson |
| 27.12% | 7.28% | Iredell |
| 13.53% | 0.67% | Johnston |
| 24.91% | 6.10% | Lincoln |
| 44.49% | 10.63% | Mecklenburg |
| 28.66% | 3.44% | Moore |
| 6.15% | 0.09% | Nash |
| 34.18% | 9.15% | New Hanover |
| 7.84% | 0.76% | Onslow |
| 64.82% | 17.36% | Orange |
| 8.90% | 0.90% | Pitt |
| 3.74% | 0.20% | Randolph |
| 1.32% | 0.18% | Robeson |
| 2.24% | 0.17% | Rockingham |
| 9.46% | 0.68% | Rowan |
| 9.44% | 1.52% | Rutherford |
| 3.36% | 0.24% | Surry |
| 40.41% | 7.51% | Union |
| 61.92% | 10.03% | Wake |
| 0.69% | 0.05% | Wayne |
| 2.65% | 0.12% | Wilkes |
| 7.76% | 0.51% | Wilson |
According to Moody's, the hit to national house prices is estimated to be as much as 5 percent and the impact is much greater for higher-priced homes, especially in parts of the country where incomes are higher.
Find out what's happening in Charlottefor free with the latest updates from Patch.
"The Northeast Corridor, South Florida, big midwestern cities, and the West Coast will suffer the biggest price declines," Moody's writes. "Counties such as Westchester, NY, Cook IL and Delaware PA will experience double-digit price declines."
According to Zillow's analysis, under current law, roughly 44 percent of U.S. homes are worth enough for it to make sense for a homeowner to itemize their deductions and take advantage of the mortgage interest deduction. Under the new tax plan, the percentage of homes drops to 14.4 percent.
Zillow's analysis says that more homeowners are likely to choose to take the standard deduction, which is doubled under the GOP plan.
WATCH: Republican Senators Celebrate Tax Vote
Image via Shutterstock
By Feroze Dhanoa, Patch National Staff
Patch Editor Kimberly Johnson contributed
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