Proposed tax reform bill that would include new limits on homeowner benefits looks DOA

Changes proposed to mortgage interest deduction, exclusion on gains from sale of principal residence

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A long-awaited proposal to simplify and overhaul the tax code appears to be dead on arrival, with Republican leaders showing little enthusiasm for a draft proposal put forward today by House Ways and Means Committee Chairman Dave Camp, R-Mich. Among the many provisions outlined in a summary of the draft legislation, those of most interest to the real estate industry include a proposal to gradually reduce from $1 million to $500,000 the amount of mortgage debt for which homeowners can claim an itemized deduction for interest paid. Changes to the mortgage interest deduction are intended to "more effectively promote homeownership, rather than also promoting leveraged purchases of larger homes than taxpayers otherwise would acquire without the tax benefit," a summary of the bill explains. The bill would also provide for a more generous standard deduction, which 95 percent of taxpayers would be better off claiming, which would help address criticism that most homeowners don't take adv...