Last week the White House released what it is calling a “first draft” of President Donald Trump’s promised tax-cut plan. The outline, which fits on a single page, largely adheres to pledges Trump made on the campaign trail, as well as to the details that have slipped out in the frenzied days leading up to the announcement.
The release does confirm that the president would like to preserve the home mortgage interest deduction, while doubling the standard deduction—two points of particular interest to homeowners, buyers and the real estate industry at large.
As it stands now homeowners can deduct interest paid on mortgages with values up to $1.1 million. This deduction lowers the amount of income a person needs to pay tax on and, in effect, lowers the cost of owning a home. (It was not immediately clear if Trump intends to change the cap.) In 2014, 32 million people claimed $279 billion in mortgage interest deductions. That’s about $8,718 in deductions each for a savings of $2,173, according to the National Association of Realtors.
The mortgage interest deduction is one of just two the proposal promises to protect. The other is for charitable donations. Both popular deductions can only be taken if a taxpayer itemizes. If not they take the standard deduction, which for an individual was $6,300 in 2016 and is adjusted annually for inflation. Under the proposal the 2016 deduction would have been $12,600.