Has the 2017 Tax Overhaul Hurt Home Sales?

The Tax Cuts and Jobs Act, an overhaul of the U.S. tax code enacted in 2017 that puts a cap on some deductions for homeowners, has “negatively impacted the housing market” by tamping down sales volume, according to a study by the New York Federal Reserve.

The 2017 tax law placed a $10,000 cap on deductions of state and local taxes, increased the standard deduction, and placed a $750,000 limit on the amount of mortgage debt that qualifies for interest write-offs.

Lawrence Yun, chief economist for the National Association of REALTORS®, said in NAR’s March existing-home sales report that tax policy changes continue to impact some markets. “The lower-end market is hot while the upper-end market is not,”

Source: “Overall, 2017’s Massive Tax Overhaul Hasn’t Hurt Home Values,” The Washington Post (April 27, 2019) and “Is the Recent Tax Reform Playing a Role in the Decline of Home Sales?” Federal Reserve Bank of New York (April 15, 2019)