Home / Daily Dose / How the Tax Act Affected Home Values
Print This Post Print This Post

How the Tax Act Affected Home Values

tax reform and housingNine months in, the Tax Cuts and Jobs Act of 2017 appears to have had an impact on home value growth, according to a report from Zillow. However, according to the site, the impact is only slight and mostly limited to certain markets.

Some of the changes brought by the December 2017 Act were a $10,000 cap on total state and local tax (SALT) deduction, lower threshold for full mortgage interest deductions, and higher standard deductions for most filers.

Following the introduction of the Act, home growth was appears to have slowed particularly in areas with homeowners that historically used the SALT deduction, compared to areas with a lower percentage of homeowners who use the SALT deduction. Around 22 percent of tax filers used the SALT deduction inin the typical U.S. ZIP code in 2015, and of those areas, the July 2018 annual home value appreciation was 0.3 percentage points slower than in fall 2017. In the zip code areas where 44 percent of tax filers typically took the SALT deduction, home value appreciation had slowed by 0.6 percentage points.

Some specific markets saw the Act make its impact more noticeably, especially in metro markets on state lines. The Boston and Portland areas, which straddle the Massachusetts and New Hampshire and Oregon and Washington lines saw a large chunk of their residents take the SALT deduction.

According to Zillow, In Boston, 41.2 percent of taxpayers took the deduction on the Massachusetts side, compare to 18.4 percent of filers on the New Hampshire side. After the Act was put in place, home value appreciation slowed by 1.3 percentage points in Massachusetts ZIP codes, while it increased speed by 0.5 percent on the New Hampshire side.

It was a similar story in Portland. On the Oregon side, where 38.6 percent of filers took the SALT deduction, annual home value appreciation slowed by 0.5 percent, while Washington ZIP codes saw a 0.1 percent increase.

Find the report from Zillow here.

About Author: Seth Welborn

Seth Welborn is a contributing writer for DS News. He is a Harding University graduate with a degree in English and a minor in writing, and has studied abroad in Athens, Greece. An East Texas native, he also works part-time as a photographer.
x

Check Also

Discussing the Future of Housing

United States Secretary of Housing and Urban Development, Dr. Benjamin Carson, will share his vision for the agency he heads at the 2019 Five Star Government Forum.

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.