GOP Tax Overhaul: How New Jersey Homeowners Will Be Affected

The U.S. House of Representatives approved the GOP tax bill once again Wednesday, the legislation's last step in Congress before it heads to the President Donald Trump's desk. How much New Jersey homeowners would benefit - if at all - depends on whom you ask.

Current mortgages are not affected by the tax plan, but home buyers in many New Jersey counties will be affected by the plan. An analysis by Zillow notes that the plan would leave only one in seven U.S. homes eligible for the mortgage interest deduction.

Multiple reports, meanwhile, say the legislation will impact the housing market, and a report from Moody's Analytics estimates that provisions in the bill will reduce house prices, causing double-digit decreases in some areas — including parts of New Jersey.

Read more: These NJ Housing Markets Will Suffer Most Under Tax Plan: Moody's

The GOP tax plan caps the mortgage interest deduction (MID) at $750,000 and limits the state, local and property tax deduction to $10,000. Under current law, interest paid on up to $1 million in mortgage loans can be deducted.

According to Moody's Analytics, the hit to national house prices is estimated to be as much as 10 percent and the impact is much greater for higher-priced homes, especially in parts of the country where incomes are higher.

According to Zillow's analysis, under current law, roughly 44 percent of U.S. homes are worth enough for it to make sense for a homeowner to itemize their deductions and take advantage of the mortgage interest deduction. Under the new tax plan, the percentage of homes drops to 14.4 percent.

Zillow's analysis says that more homeowners are likely to choose to take the standard deduction, which is doubled under the GOP plan, though it would eliminate the $4,050 exemption you get to take for each of your dependent children.

Watch Now: GOP Tax Bill Clears Congress, Heads To Trump

Image via Shutterstock

By National Staff

Shannon Antinori, Patch National Staff, contributed