Trump tax change creates considerable tax benefits from homeowner
New York, DC Tops in Savings
The typical homeowner in New York that is hit by the higher salt cap, saves $ 7,092 annually, Redfin estimated. That led all states and only followed the District of Columbia ($ 7,200).
California followed New York at $ 3,995 in median savings, with New Jersey ($ 3,897), Massachusetts ($ 3,835) and Connecticut ($ 3,133) who complete the top five.
At Metro level, Nassau County, New York, the nation with average annual savings of $ 7,200 – led the maximum possible deduction. San Francisco ($ 6,843), San Jose ($ 6,661), New York City ($ 5,473) and Oakland ($ 5,455) are also high in the report.
Where savings are the smallest
On the other side of the spectrum, homeowners in South Dakota will save $ 1,033 per year, the lowest figure of each state. Alaska ($ 1,052), Nevada ($ 1,090), Tennessee ($ 1,097) and New Hampshire ($ 1,101) followed.
“For households in these states, the only real way is to take advantage if their home is valuable enough for real estate tax to exceed $ 10,000,” said Asad Khan, senior economist of Redfin. “Even then the savings are relatively small, because many of these owners are hardly the old limit.”
Khan also noted that all five of the lowest ranked states have no state tax, which reduces the chance that homeowners would have surpassed the earlier $ 10,000 limit.
Who benefits the most
The share of homeowners who will probably beat the CAP varies greatly per state.
In Massachusetts, 85.5% of households can benefit if they specify subdivisions – the highest percentage in the country. New Jersey (84.2%), Oregon (79.8%), New York (75.8%) and California (74.3%) followed.
Only 1% of Tennessee homeowners are expected to benefit, the lowest of each state.
Nevada (1.2%), Wyoming (2.2%), South Dakota (2.8%) and Alaska (3.3%) also had some of the smallest shares.
“West Virginia has the lowest median home value in the country, but almost a third of the homeowners could benefit from the new cap there,” said Khan. “Advantages vary so strongly because the mix of housing values, real estate tax and income taxes looks very different, depending on where you live.”
Limited effect on house prices
“Home buyers in states such as Illinois, where the potential tax savings are high compared to house prices, can consider the new salt cap as an opportunity to increase their budget in the Thuisbuying,” Khan said. “Theoretically, that can lead to an increase in demand and higher prices.”
But in expensive coastal metro’s, Khan said, the tax benefits are modest compared to housing values.
Homeowners in Midwest cities such as Cleveland, Indianapolis, Chicago and Pittsburgh are expected to see larger returns compared to real estate prices, explained the report.
