The National Association of Realtors® has published a study focusing on the impacts of comprehensive tax reform. While the study did not say so, the reforms identified in the study closely mirror President Trump’s proposed tax reform plan. *
NAR’s study focused on how lower and consolidated marginal tax rates would impact income taxes. Specifically, Lowering and consolidating tax rates to three rates with a top rate of 33 percent, doubling the standard deduction, eliminating all itemized deductions other than charitable contributions and mortgage interest, and eliminating personal exemptions, which is comparable to several other income tax proposals released in the past few years. The study indicates the reforms would result in higher income taxes for those with an adjusted gross income (AGI) between $75,00 and $250,000 and lower taxes for another with an AGI over $200,000.
In addition, the study concludes comprehensive tax reform would impact the demand for owner-occupied housing by reducing the number of homeowners who claim the mortgage internet deduction, eliminating the itemized deduction for property taxes and decreasing the marginal tax rate. The authors conclude the after-tax cost of homeownership would increase and home prices would fall in the short run as housing becomes a less attractive investment. Read NAR’s summary here:
* The Trump Plan recommends a top rate of 35 percent, doubling the standard deduction and eliminating deductions except for the mortgage interest and charitable contribution deduction.