Yesterday, Trump unveiled a single piece of paper “detailing” his tax proposals. There are no bills or resolutions or research to back any of it up or flesh it out. So when and how any of this will ultimately be turned into actionable policy is, like the man himself, anyone’s guess. Color me shocked.
It starts by highlighting how he wants to simplify the individual tax code and make filing taxes easier (and ends with how he wants to line his own pockets and balloon the deficit). I don’t know about you, but it’s been my experience that when someone tells me they want to make something easier, I’m usually worse off. This proposal doesn’t disappoint.
As I’m sure you’ve read by now, all deductions would be eliminated except mortgage interest and charitable deductions. “Whew” you think. Well, not so fast. Property taxes would no longer be deductible.
Pssst … have you heard that Texas property taxes are high? Have you heard that in the past few years most people’s bills are up 30 percent and that we’re likely to see another big jump in a few short days?
Dallasites claiming a homestead pay roughly $2,300 per $100,000 in assessed value in property taxes. Non-homesteaders pay about $2,800 per $100,000 in assessed value. Shockingly, this is an equal opportunity tit in the wringer. So far he’s not proposing that the property tax deduction be eliminated only for those paying less than $10,000 per year in tax … but the ink isn’t even wet for it to be dry yet, so who knows?
You may be thinking that since the proposal includes a doubling of the personal deduction, that’ll cover it. Not really. the 2016 assessed value of my home was under $300,000, but when combined with the sales tax deduction (theoretically also going away), I’ll lose thousands. So it doesn’t take much to start losing.
And remember, the less you have, the more each dollar counts. So while this would seemingly impact all homeowners, it would impact lower income buyers and owners more.
For the sake of it, let’s say that this makes its way into the tax code. What would the impact be around here? Lower and middle income homebuyers would become even-lower and middle income homebuyers. It’s bad enough that prices on starter homes have risen quickly, if property tax deductions disappear, those buyers will have less to spend. If enough buyers have less to spend, sellers will have to drop prices. If prospective homebuyers and owners turn to renting, we’d likely see rents increase due to lack of supply in a market already tight on rentals.
Ditto for fixed income homeowners. They’d be pinched at both ends with higher property taxes and less income because of higher federal taxes.
Remember, there’re no magic beans here, just one pot of money with too many hands in it.
Now to really push you to a happy hour … any happy hour … couple this with diminished immigrant spending on housing due to antagonistic immigrant policies and bigoted public opinions. Oh, and Dallas has one of the highest populations of immigrants and thus immigrant homeowners, right?
What’s that cocktail taste like?
For those homeowners who voted for Trump all I can say is, “Drink your juice, Shelby.”
Remember: High-rises, HOAs and renovation are my beat. But I also appreciate modern and historical architecture balanced against the YIMBY movement. If you’re interested in hosting a Candysdirt.com Staff Meeting event, I’m your guy. In 2016, my writing was recognized with Bronze and Silver awards from the National Association of Real Estate Editors. Have a story to tell or a marriage proposal to make? Shoot me an email email@example.com.