Mortgage

Republicans strike unified deal on tax reform

Here’s what it means for the MID

Late Wednesday, the Congressional committee negotiated the tax reform bill and came to an agreement in principal, with plans to send it back to the Senate once it is officially voted on.

The bill reportedly strikes several compromises between the previous House and Senate legislations, including a compromise on the mortgage interest deduction. 

Earlier this month, the Senate passed a bill to completely overhaul the current tax system. The House passed its tax reform bill back in the middle of November. The two legislative bodies then created a committee to come to an agreement about which tax bill to send to the president's desk.

While the House tax bill cut the mortgage interest deduction in half, bringing it from $1 million to $500,000, the Senate version left the MID intact. In the newly passed compromise, the mortgage interest deduction is cut to $750,000.

The standard deduction was still doubled from $12,000 to $24,000, in line with the bills in both the House and the Senate. And for some experts, this increase alone was seen as a threat to homeownership as less homeowners would be motivated to itemize with a higher standard deduction.

Several other details that have been released including slashing the corporate tax rate to 21%, and dropping the top tax rate for individuals from 39.6% to 37%. These new rates would take effect next year.

The new bill would also repeal Obamacare’s individual mandate which requires all Americans to have health care or pay a fine.

Once the final details are ironed out in the committee, the bill will be passed to Senate with the hopes of being voted through by Tuesday, then to the House where Congress hopes it will be sent to the president’s desk by Wednesday.

“On the eve of this historic moment for our country, President Trump stood with middle-income families and young people who will benefit from the most comprehensive tax reform legislation in over thirty years,” U.S. Department of the Treasury Secretary Steven Mnuchin said.

“The bill that President Trump will sign into law will restore faith in the American dream by creating a simpler, fairer system that will lead to more economic growth and opportunities for everyone,” Mnuchin said. “Tax reform will not only provide tax cuts for hardworking Americans and their families, it will also make American businesses more competitive so that workers will have access to more, better-paying jobs.”

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