Realtors, builders worried mortgage interest deduction at risk in Trump tax plan

Realtors, builders worried mortgage interest deduction at risk in Trump tax plan
© Getty Images

Realtors and homebuilders expressed concern on Wednesday that President Trump's tax proposal would eliminate the prized mortgage interest deduction.

The major concern is that the Trump administration's proposed $25,000 standard deduction will stymie the home-buying plans of lower- and middle-income Americans if the targeted tax incentive falls by the wayside.

The groups argue that the fallout from the the loss of the mortgage deduction could cause home values to plummet and create a loss of much-needed equity.

“Doubling the standard deduction could severely marginalize the mortgage interest deduction, which would reduce housing demand and lead to lower home values,” said Granger MacDonald, chairman of the National Association of Home Builders and a homebuilder and developer from Kerrville, Texas.

ADVERTISEMENT
The National Association of Realtors (NAR) said that while the tax plan is well intentioned, it is a “non-starter” with the real estate industry.

"By doubling the standard deduction and repealing the state and local tax deduction, the plan would effectively nullify the current tax benefits of owning a home for the vast majority of tax filers,” said NAR President William Brown.

Treasury Secretary Steve Mnuchin previewed the tax plan with a one-page outline of its central components. 

Real estate accounts for more than 19 percent of America’s gross domestic product, or more than $3 trillion in investment, according to the NAR. 

“But for roughly 75 million homeowners across the country, their home is more than just a number," Brown said. "It represents their ambitions, their nest egg, and the place where memories are made with family and friends."

Real estate, mortgage and builders groups have long been dedicated years of lobbying to preserve mortgage interest deduction through any overhaul of the tax code.

"As it stands, homeowners already pay between 80 and 90 percent of U.S. federal income tax," Brown said.

"Without tax incentives for homeownership, those numbers could rise even further," he said.

"And while we appreciate the administration’s stated commitment to protecting homeownership, this plan does anything but."