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GOP Tax Overhaul: How Maryland Homeowners Will Be Affected

And according to a new study by real estate company Zillow, many potential Maryland homeowners are going to lose out due to a lowered cap on the mortgage interest deduction. The people who are going to be hurt the most are those who depend on the State and ...

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WASHINGTON, DC — The Republican tax bill has been approved by both houses of Congress, which means that Marylanders are going to find out who are the real winners and losers of the lawAnd according to a new study by real estate company Zillow, many potential Maryland homeowners are going to lose out due to a lowered cap on the mortgage interest deduction.The people who are going to be hurt the most are those who depend on the State and Local Tax deduction (SALT), which is being reduced to $10,000Current mortgages are not affected by the tax plan, but home buyers in many Maryland counties will be affected by the plan, which Trump planned to sign in a televised ceremony Wednesday afternoonBut there will be some in Maryland who will see a tax decrease, at least for the next few yearsThe child deductible is doubling to $2,000, and the Standard Deduction is also doubling to $12,000 for singles and $24,000 for couplesIf you want to see how the tax bill will affect you, try using this calculator from Market Watch.For the future, changing the MID could have a chilling effect on Maryland's housing economyThe MID allows homeowners to deduct the interest paid on their mortgages from their taxable income, which decreases their overall tax bill, instead of using the Standard DeductionUnder the current law, the MID is capped at $1 millionBut under the GOP tax bill, that would drop to $750,000The reduction would only apply to new mortgages, not existing ones.The percent of homes under the bill where the mortgage interest in the first year of the loan would be high enough for a homeowner to take the MID instead of opting for the standard deduction (assuming also taking advantage of SALT deductions) changes drastically from previous law in several Maryland counties:Anne Arundel: 88.09% currently to 21.46%Baltimore: 51.06% currently to 9.16%Calvert: 84.24% currently to 15.63%Carroll: 88.09% currently to 12.51%Charles: 84.88% currently to 5.61%Frederick: 82.80% currently to 13.32%Harford: 67.82% currently to 6.67%Howard: 94.79% currently to 47.16%Montgomery: 90.65% currently to 43.20%Prince George's: 81.53% currently to 7.25%Maryland GovLarry Hogan said Wednesday that hise administration will submitt legislation to mitigate potential negative impacts of federal tax reform on taxpayersThe legislation will return any additional state revenue received through the loss of federal deductions and exemptions."As you all know, it looks like the federal tax reform effort may soon be officially signed into lawIts exact impact on the State of Maryland has not yet been determinedIt's clear that some people's taxes will go down, and some will go up..However, it is very clear that due to the loss of several longstanding federal tax deductions and exemptions, Maryland state revenue will likely increase by hundreds of millions of dollars...Our goal will be to leave that money in the pockets of hardworking Marylanders."All of this could have a negative effect on real estate markets across the country, which are still recovering from the 2008 housing market crashAccording to Moody's, the bill could reduce national home prices by as much as 5 percent"The Northeast Corridor, South Florida, big midwestern cities, and the West Coast will suffer the biggest price declines," Moody's writes"Counties such as Westchester, NY, Cook IL and Delaware PA will experience double-digit price declines."According to an analysis by Zillow, under current law roughly 44 percent of U.Shomes are worth enough for it to make sense for a homeowner to itemize their deductions and take advantage of the mortgage interest deductionUnder the new bill, the percentage of homes drops to 14.4 percent.Zillow's analysis says that more homeowners are likely to choose to take the standard deduction, which is doubled under the proposed GOP bill.States like New York, California, Hawaii, Massachusetts and the District of Columbia have the highest percentages of homes purchased with loans above $750,000 in 2017, according to ATTOM Data Solutions.Counties with the highest shares of homes with property taxes above $10,000 are Westchester County, New York, Luna County, New Mexico, Rockland County, New York, Mathews County, Virginia and New York County (Manhattan)Counties with the highest volume of homes with property taxes above $10,000 were Nassau County, Long Island, Los Angeles County, California, Suffolk County, Long Island, Bergen County, New Jersey and Harris County, Texas, according to ATTOM Data Zillow estimates that in Washington D.Cfor example, the percentage of homes valued high enough for an owner to get a better deal by taking the mortgage interest deduction — assuming they also take advantage of the SALT deduction — goes down from 98 to 64 percentZillow's analysis is based on the estimate that homeowners are in their first year of paying back their loan — when interest payments are largest — and they have a 30-year, fixed-rate mortgage at a 4 percent interest rateCounty property tax numbers were based on 2016 numbers from the National Association of Home Builders.An analysis from The Tax Foundation in August says that reducing the cap would increase taxes primarily for high-income taxpayers.See the full report from Zillow hereImage via Shutterstock By Feroze Dhanoa, Patch National StaffShannon Antinori, Patch National Staff, contributed 6231 North Dakota Ave NWWashington, District of Columbia 20011 For Sale: $829,0005 bd/3 full ba, 1,948 sqft More Info 9017 Manchester RdSilver Spring, Maryland 20901 For Sale: $249,9003 bd/1 full ba, 1,000 sqft More Info 4510 Woodberry StreetHyattsville, Maryland 20782 For Sale: $537,4903 bd/2 full ba, 2,256 sqft More Info 2109 Wilson Pl ELandover, Maryland 20785 For Sale: $250,0003 bd/2 full ba More Info 714 Forston StTakoma Park, Maryland 20912 For Sale: $329,0006 bd/2 full ba More Info 11204 Montgomery RdBeltsville, Maryland 20705 For Sale: $399,5004 bd/4 full ba More Info 7611 Maple Ave Apt 408Takoma Park, Maryland 20912 For Sale: $184,9002 bd/1 full ba, 1,026 sqft More Info 216 Madison St NWWashington, District of Columbia 20011 For Sale: $625,0003 bd/2 full ba More Info 7010 Canyon DrCapitol Heights, Maryland 20743 For Sale: $284,9004 bd/2 full ba, 1,050 sqft More Info 9402 Carol StUpper Marlboro, Maryland 20774 For Sale: $488,5009 bd/6 full ba More Info Read More Subscribe More from Riverdale Park-University Park PatchUp next on Riverdale Park-University Park Patch Doctor Charged With Rape: Patch PM Bowie White Christmas Update: Morning Flurries Holiday 2017: Your Last-Minute Gift Guide ga("send", "event", "taboola", "served", "impression", 1, { "nonInteraction": 1 }); if (mobile_detect.is_phone) { window._taboola = window._taboola || []; _taboola.push({ mode: 'thumbnails-b', container: 'taboola-below-article-thumbnails', placement: 'Mobile Below Article Thumbnails', target_type: 'mix' }); } else { window._taboola = window._taboola || []; _taboola.push({ mode: 'thumbnails-a', 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