GOP Tax Plan: How Wisconsin Homeowners Will Be Affected

Speaker Paul Ryan hailed Congressional approval of the GOP tax bill on Wednesday, calling it "historic" tax reform that will make it worthwhile for American companies to stay in the United States.

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 Wisconsin

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 Wisconsin counties will be affected by the plan, which Trump planned to sign in a televised ceremony Wednesday afternoon.

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. In Wisconsin, the percentage of eligible homes will drop significantly, in some cases from nearly 10 percent to less than 1 percent.

Homeowners in Waukesha, Racine and Dane Counties will get clobbered, according to Zillow's analysis. Nearly 72 percent of homeowners in Waukesha County will no longer be eligible to take a mortgage interest reduction. About 68 percent of homeowners in Dane County and 50 percent of those in Racine Counties will be affected.

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.

"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."

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