Study: New Federal Tax Law Will Hurt Many Honolulu Homeowners
The loss of some deductions for mortgage and state and local taxes impacts areas with the most expensive real estate.
Some Honolulu homeowners will get hit hard by the new tax law signed by President Donald Trump.
A found that the median Honolulu homeowner will lose more than $70,000 over a 30-year mortgage due to new limits on how much mortgage interest and state and local taxes they can deduct. The median homeowner is expected to lose $3,200 in the first year, making Honolulu the sixth most-impacted metro area in the nation.
The Tax Cuts and Jobs Act of 2017 reduces the mortgage interest deduction to borrowing of up to $750,000 for mortgages taken out after Dec. 14, 2017; caps state and local tax deductions at $10,000; and doubles the standard deduction.
That increase in the standard deduction could cancel out the losses from smaller housing deductions, meaning some homeowners might still pay less taxes overall. But researchers from Apartment List said that the changes could deter homeownership.
The changes in housing-related tax deductions hurt homeowners in expensive housing markets. The study found that the five worst-hit cities are in California, where many real estate prices and property tax rates are higher than in Honolulu. The study found the median Bay Area homeowner could lose more than $100,000 over the course of a 30-year mortgage.
The areas hurt the most by the changes in housing tax deductions are all in politically left-leaning states that didn’t support Trump. The president lost badly to Democrat Hillary Clinton in Hawaii, winning less than 30 percent of the vote statewide.
The impact on Hawaii homeowners could be even worse than the study suggests. The Apartment List analysis relied upon 2016 Census data that says the median home value is $658,900 in Hawaii. According to a , the median home price on Oahu in February was $770,000.
“As homes get even more expensive, Honolulu homeowners will lose even more in housing tax deductions,” explained Sydney Bennet, a senior research associate at Apartment List, in an email.
