President Trump has proposed a tax code overhaul that might double or greatly increase the standard deduction and remove many itemized deductions, especially local and state deductions, probably including real estate (and school district) taxes.
It’s quite unclear right now how this will go, as its effect would be complicated by the uncertainty over how Obamacare will be “replaced” (generating a lot of anger right now).
The Wall Street Journal has a strong editorial this weekend, “Houses of Lobbyists”. The WSJ believes that the real estate industry is whining about its own prediction of the loss of home values because people won’t have the same tax incentive to buy rather than rent.
Loss of real estate values would also harm people with big mortgages (reminders of the subprime crisis a decade ago, contributing to the 2008 financial crisis), and the coffers of local governments. It might cause some planned deals to fail, and some building projects to be canceled.
NAHB has a statement here, as does Palm Beach Post, and Illinois Realtors, to name a few.
The Wall Street Journal expresses a moral objection to the dependence on tax cuts to stimulate ownership over renting, and maintains that in other western countries it doesn’t work this way. As a real estate businessman, you would think Trump himself could wonder these things (as would his two sons running his empire).
It is possible that I will consider “downsizing” this summer, a move that could help me focus on selling my “work” and make me more morally credible in some circles because I live in an “inherited” house. But anything I say right now would be very speculative.
Update: May 9, 2017
Vox, in a piece by Alexa Fernandez Campbell, argues that Trunp's tax plan could invite abusive use of home based businesses as tax shelters, even sole proprietorships, even mine.