It has been over a year and a half since the United States Congress passed the Tax Cuts and Jobs Act of 2017, the famous Trump tax cuts. Early critics of the law included the National Association of Realtors, who predicted that the law would cause housing prices to decline due to provisions capping deductions on SALT (state and local taxes) at $10,000. However, according to a recent article in the Washington Post, these predictions made by the tax law’s opponents have yet to come true.
The Washington Post cites a New York Federal Reserve survey indicating that housing prices have not declined since the passage of the 2017 tax cuts. Although home buyers no longer enjoy the same tax deductions they once had, prices have remained steady. However, the article does note that the number of homes being sold has decreased since the passage of the Act.
The article also points out that a new group of property owners, called “Tax refugees,” have started relocating to locations with fewer property taxes. Many of these refugees have migrated to Florida, a state with no income tax.
Capping the SALT deductions at $10,000 does appear to have affected the housing market, just perhaps not in all the ways initially envisioned by experts. According to one economist, Mark Fleming of First American Financial, the creation of tax refugees is creating “greater demand in the high end of lower-cost real estate markets.” Perhaps time will be the best indication of some of the tax cut’s long-term effects.
Here is a link to the Washington Post article cited above: https://www.washingtonpost.com/realestate/overall-massive-tax-overhaul-hasnt-hurt-home-values/2019/04/23/2ec0fa5c-6537-11e9-8985-4cf30147bdca_story.html?noredirect=on&utm_term=.57cf5f3eb4ac