Renters came out winners under the new tax law.
That’s great for the wealthy and the banks. Not much help for the average Joe.
California Gov. Jerry Brown calls the tax law “evil in the extreme.” That’s demagoguery. Most taxpayers will end up with more money in their wallets.
Homeowners still have the option of taking deductions for most mortgage interest and property taxes, but almost all will crunch the numbers and find it pays to take the nearly doubled standard deduction instead.
The other major deduction for homeowners has been property taxes. The new law puts a $10,000 lid on deducting all state and local taxes combined, whether income, sales or property taxes. Homeowners in most of the nation don’t have much to worry about.
It’s true that the cap will likely hit the wallets of the bicoastal elite. Some 64 percent of buyers in Manhattan’s rarefied real-estate market took out a mortgage that big, and 58 percent of San Francisco buyers did.
Home ownership isn’t any higher than in the late 1960s — with only 64 percent of households owning their own home. For minorities, the goal is even farther out of reach, with only 42 percent of black families and 46 percent of Hispanic families owning their home. So disregard the partisan claim that lowering the cap on the mortgage interest deduction is going to hurt the middle class.
Hardest hit are a few tony counties with multimillion-dollar homes like Westchester, where the average property tax tab is a whopping $15,000. For that, the streets should be paved with gold.
But the tax change certainly won’t hurt middle-class first-time buyers. They purchase homes with a median price of $182,500. In the past, the tax code encouraged wealthy homeowners to buy even bigger homes and borrow more.