“So many high-net-worth clients already have an issue with this. The proposal would only make things worse,” says Tony A. Rose, a CPA and founding partner of Rose, Snyder & Jacobs LLP in Encino, Calif. “Leverage on expensive homes would certainly become less attractive.”
In that event, “Purchasers of new homes would be more constrained. It could mean a bigger cash down payment, a sober review of the purchase price, or borrowing against an investment portfolio instead,” says Timothy Speiss, partner-in-charge of the Personal Wealth Advisors practice at EisnerAmper LLP in Manhattan.
“This will certainly impact residential housing prices,” asserts Christian, the Park City CPA.
The proposed act also eliminates deducting a second home’s mortgage interest.
Still, whatever itemized deductions the client can muster would be unlimited. The bill repeals the so-called Pease limitation, which is presently set to limit itemizations for singles with 2018 adjusted gross income exceeding $266,700 and joint filers who top $320,000.
“It’s important for clients to do proper tax planning with their accountant ahead of time,” concludes Tania Kvakic, a financial advisor at RBC Wealth Management in Phoenix. “They should meet with their tax team prior to next year in order to maximize their deductions.”
Most of the proposed changes would take effect in 2018.