NoVA Homeowners Face Tax Hike Under Proposed Tax Reform Bill

Balancing tax reform on the backs of homeowners isn’t a viable option. Understand the direct threat to Northern Virginia homeowners and homeownership in America posed by the Brady tax bill.

Likely impacts on homeowners include:

• On average, homeowners nationwide will see an $815 tax increase, while non homeowners will get a tax cut of $516 (Based on adjusted gross incomes between $50,000 and $200,000) if the proposed tax reform bill is enacted into law. Further, under the tax reform bill, home values are predicted to drop by more than 10 percent, resulting in a substantial equity loss of homeowners’ largest asset.
• Since the beginning of 2017 alone, more than 15,000 new homeowners in Northern Virginia would pay more taxes based on a proposed cap of the Mortgage Interest Deduction (MID) at $500K for new mortgages. This impacts Northern Virginia homeowners at a higher rate than the national average, since almost 40 percent of all transactions in Northern Virginia in 2017 sold for more than $500,000.
• Under the proposed rules, homeowners would be required to live in their home substantially longer to receive the exemption on capital gains tax from the sale of a primary residence. Under the proposed rules, homeowners would be required to live in their home for five of the eight years before a sale to qualify for the exemption, versus the current rule requiring just two of the previous five years. Northern Virginia is a highly transient area with military personnel, federal government employees, and government contractors. The bill also eliminates the deduction for moving expenses, so those who do move often will be impacted even more.
• The bill increases the standard deduction and eliminates other significant deductions, including the deduction for state and local taxes (SALT). Homeowners in Virginia and across the country would be double-taxed on the money they pay for state and local taxes. The SALT deduction is strongly tied to homeownership—since the overwhelming number of itemizers nationwide who claim the SALT deduction (44 million), also deduct property taxes (40.7 million) and mortgage interest (35.4 million). These changes will diminish the value of the mortgage interest deduction and put homeownership tax incentives beyond the reach of more than 90 percent of American families.