The GOP tax plan has been quite a controversial bill which was tabled in the United States Senate and could mean a lot for the Federal Reserve and every individual in the States who contributes to it.
If the bill passes before Thanksgiving (estimated time) then it could mean a lot for you and your prospects as a purchaser of new property in the upcoming years. The following are the main ways the bill can impact you after its imposition.
1. Relatively More Income
The mortgage limit has been reduced from $1 Million to $500,000, which means that for people who own property valued at greater than $500,000 they will be able to write off the excess interest rate that used to naturally grow on it. In layman terms, the rich people can expect to get even richer because their income will not be taxed for having a lavish property.
2. Tax for Middle-Income Earners
The bracket for middle income in the United States stands at $10,000 now, and that amount is subject to a considerable 25% tax rate as of right now. The bill which has been talked about in the parliament house called HR 1 has no such implications on house bills because it is concerned primarily with job-based taxes.
However, people lying above the bracket can expect around a 5% increase in this property and asset tax which they have to pay, and that can subsequently create an upset in the housing markets for states which host most of the US population.
In essence, what is happening is that commercial and luxurious markets for housing are being made more affordable at the cost of the middle-class housing facilities, and that could have a significant adverse impact on individuals, especially the millennials because the market might not have much available in their affordability criteria.
3. Standard Deductions
The Senate bill has clearly stated that there would be a rise of double the amount in property taxes for couples and individuals alike, their amount obviously varying according to their marital status. The standard deductions will reduce the ability of people to write off their interest on mortgage loans, and it is estimated that only 4% of people will opt for writing off mortgage-loan interests in the event that the bill passes, compared to 21% at present.
The impact will, again, be felt on the individuals but can give a fiscal boost to the government itself.
4. Second Homes
Many people in the USA prefer having second homes in popular tourists spots which they can rent out to tourists for interim periods. It has been a considerable source of income for home-workers in the US, but that is about to change thanks to the bill.
For people with significant cuts already existing, it was allowed to write off-debts on the second house. After the possible imposition of the bill, however, it will be mandatory to pay the mortgage tax amount on the residence.
Posted by Randy Blakeslee - GetnSocial
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