Home Builders Will Oppose Republican Tax Bill

Donald Trump has promised that the Republican tax bill won’t touch the mortgage interest deduction. Property taxes will also remain deductible. That sounds like a bullet dodged for the homebuilding industry, right?

Nope. They are opposing the bill:

The plan nearly doubles the standard deduction, ends personal exemptions and likely repeals the deductions for state and local income and sales taxes. The combination would remove much of the incentive for the mortgage-interest deduction outside the highest-cost areas and could potentially hurt home prices.

Here’s the deal. Itemizing only makes sense if your itemized deductions are bigger than the standard deduction in the first place. A bigger standard deduction means that for some people, there’s no incentive to itemize at all, and that includes itemizing the mortgage interest deduction. And that means there’s no extra incentive to buy a house because you’ll get to deduct the mortgage interest, thus saving money.

So the homebuilding industry is opposed. Taxes are hard.