Under tax reform, national home prices are expected to take a hit, but it will likely be a few years before experts can accurately assess how the new law will affect each city’s individual housing market. That being said, a good rule of thumb is this: if you live in a city with high housing costs, your market will likely get more expensive. If you live in a city with moderate to low housing costs, you may not notice any difference at all.

The tax bill does present a few changes for homeowners everywhere:

So for some households, itemizing the mortgage interest deduction may mean that juice is no longer worth the squeeze since it would be lower than their standard deduction. The state and local property tax deduction has a greater impact on a given market’s drop in home prices – that’s because there’s a cap on how much mortgage interest deduction can affect a single homeowner. The state and local tax deduction didn’t have any cap at all before the new law, so what this ends up costing you is proportional to your city’s property tax rate – a potential middle finger salute for homeowners in places like New York City.

Some other things to consider: the new mortgage interest deduction cap does not affect homes purchased before Dec. 15, 2017; those homebuyers will still be able to deduct interest on up to $1 million worth of mortgage debt on their primary residence. For those with mortgage interest deductions on home equity loans, you’re out of luck. The new law says you can’t deduct any of this interest at all, and that change takes effect immediately.

If you’re a renter, it’s hard to say if the law impacts you at all. Some believe it will put downward pressure on rent since tax incentives for developers are still in place; you might also see more development and a higher supply – though it would take years to bear out.

Under tax reform, national home prices are expected to take a hit, but it will likely be a few years before experts can accurately assess how the new law will affect each city’s individual housing market. That being said, a good rule of thumb is this: if you live in a city with high housing costs, your market will likely get more expensive. If you live in a city with moderate to low housing costs, you may not notice any difference at all.

The tax bill does present a few changes for homeowners everywhere:

  • The cap on mortgage interest deduction drops to $750,000
  • The property tax deduction will drop to $10,000
  • The standard deduction for all taxpayers will increase to $12,000 for single filers and $24,000 for joint filers

So for some households, itemizing the mortgage interest deduction may mean that juice is no longer worth the squeeze since it would be lower than their standard deduction. The state and local property tax deduction has a greater impact on a given market’s drop in home prices – that’s because there’s a cap on how much mortgage interest deduction can affect a single homeowner. The state and local tax deduction didn’t have any cap at all before the new law, so what this ends up costing you is proportional to your city’s property tax rate – a potential middle finger salute for homeowners in places like New York City.

Some other things to consider: the new mortgage interest deduction cap does not affect homes purchased before Dec. 15, 2017; those homebuyers will still be able to deduct interest on up to $1 million worth of mortgage debt on their primary residence. For those with mortgage interest deductions on home equity loans, you’re out of luck. The new law says you can’t deduct any of this interest at all, and that change takes effect immediately.

If you’re a renter, it’s hard to say if the law impacts you at all. Some believe it will put downward pressure on rent since tax incentives for developers are still in place; you might also see more development and a higher supply – though it would take years to bear out.