Know your grandfather rule. Also, severe marriage penalty:
First, home buyers need to understand that deductions for mortgage interest are now capped at home acquisition debt of $750,000. This can add to the costs of buying homes in expensive housing markets where home prices top that number.
It’s interesting to note that the $750,000 limit applies to single taxpayers as well as married couples. According to a prior ruling of the Ninth Circuit Appeals Court, when two unmarried people buy a home together, they can combine their limits and deduct the mortgage interest on debt up to $1.5 million.
Time to divorce your partner to buy that 2.5M Sunnyvale house.
You are assuming people were already homeowners before the tax reform. What about the newbies that bought recently? They have nothing to compare against other than the standard deduction.
You are absolutely right with your second point. It’s the tech sector that drives bay area economy and housing.
Regarding your first point, most home owners in the bay area used to be under AMT, so were not getting state and local tax deductions. MID is grandfathered. So no surprises for existing home owners and in fact they will not sell unless they really have to. So less inventory.
Did you read @manch’s article? It says if the buyer entered into a binding contract before 12/16/17 but closed before 4/1/18 they can still deduct up to $1M in mortgage interest.
