White House responds to local tax plan concerns

Posted at 6:00 AM, Oct 20, 2017
and last updated 2017-10-20 10:59:24-04

President Trump's plan to provide tax relief to the middle class could end up costing some San Diego homeowners.

It's because the president's plan could eliminate thousands of dollars in deductions that local families claim each year. And the higher the home values get, the more people can write off on their taxes.

"It is a significant amount of deduction, so I think it does encourage home ownership," said Mark Goldman, a loan officer at C-2 Financial and real estate lecturer at San Diego State University. 

Currently, a single person who buys a median priced condo of $400,000 with 10 percent down could write off $21,000 of mortgage interest and insurance premiums, and property taxes in the first year. But if the president eliminates the property tax and insurance deductions, that write off falls to just over $14,000. 

And Trump's proposal to double the standard deduction for single people to $12,000 would still be too low to make any difference for that same homeowner.

It would, however, double to $24,000 for married couples, so it would benefit a family who owned that same condo.

White House spokeswoman Natalie Strom says California stakeholders are raising the homeowner tax write off issues during tax plan negotiations.

"We're not in the business of taking things off the table," she said. "We want to get this done and get tax relief for the middle class."

Strom said it's important to look at the tax plan as a whole, noting it would simplify the code and also increase the child tax credit. 

She said it's still unclear what the income levels for the plan's three tax brackets, 12, 25, and 35 percent will be. 

The plan does keep the mortgage interest deduction, but families who do have mortgage insurance can eventually cancel it, once they pay down their homes enough.