Mortgage

Senate tax bill keeps mortgage interest deduction intact

House and Senate versions differ on housing cap

Senate Republicans are set to unveil their new tax reform today, but say they plan to keep the mortgage interest deduction intact.

A new article by Alan Rappeport and Thomas Kaplan for The New York Times reveals multiple senators announce the new bill will keep the current mortgage interest deduction cap at $1 million.

This is a change for the House tax reform bill, which would slash the MID in half to just $500,000.

This plan will likely receive much more support from the housing industry, which is currently united against the House tax bill. Housing experts explained the House bill could cause inventory shortages in many cities and be especially hard on areas such as California where home prices are higher.

From the NYT article:

As expected, Senate Republicans also plan to eliminate the ability of people to deduct the state and local taxes they pay, which could set up a huge battle with House Republicans who have been feverishly pushing lawmakers to preserve the deduction. The House bill currently limits the deduction to $10,000 for property taxes only, a provision Republicans from New Jersey and New York have said would not be enough to win their votes.

The Senate hopes to send its tax reform to President Donald Trump’s desk by Christmas. As for the House’s bill, the Ways and Means Committee is currently debating the bill, is expected to vote on it today and will send it to a full House vote next week.

The New York Times reports there are several other key differences between the two bills which the Senate and House will now be competing to pass. From the article:

The stark changes between the bills show the differences emerging as the House and Senate push forward with competing versions of the most ambitious tax code rewrite in decades.

The Senate bill would lower the corporate tax rate to 20 percent from 35 percent but would delay implementation for one year, with the new rate not kicking until 2019. The House bill includes no such delay and the White House has been lukewarm about such an idea.

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