Homeownership Will Get More Expensive for Some Residents in SoCal, Bay Area Under GOP Tax Bill

Politics
A home is seen for sale in Manhattan Beach in May, 2017. (Credit: Jay L. Clendenin / Los Angeles Times)

A home is seen for sale in Manhattan Beach in May, 2017. (Credit: Jay L. Clendenin / Los Angeles Times)

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The Republican tax bill that appears headed for President Trump’s desk reduces the ability of home buyers to deduct mortgage interest, which will be a hit to home shoppers in Southern California and the Bay Area, where housing costs are sky-high.

But the interest provision is far more limited in scope than a previous proposal. Real estate experts and professionals said Tuesday that they don’t expect a big effect on home buying in the region, and that any ramifications will be largely restricted to well-to-do neighborhoods.

Under the new plan, which passed the House on Tuesday and was headed for a late vote in the Senate, buyers can deduct interest on mortgages up to $750,000, for homes bought after Dec. 15. (Homes purchased on that date or before then aren’t affected.) That’s down from the current $1-million limit, but an increase from a $500,000 cap that previously passed the House.

That means a home buyer with a 20% down payment can purchase a $930,000 home and still deduct all the interest. Even for a borrower who took out a $1-million loan at 4% interest, $30,024 of interest payments are deductible in the first year, leaving $9,656 that isn’t.

Read the full story on LATimes.com. 

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