breaking news

Watch live: PBC parents, students talk to the school board about safety

Tax cuts: Mayors fret fewer incentives to buy homes hit local coffers

The biggest federal tax changes in three decades please plenty of companies and households, if not budget hawks lamenting a projected $1 trillion pile of new debt.

But area mayors meeting this week grappled with other effects — such as possible downward pressure on home prices and local tax revenues.

“There is a potential for losing property values,” said Theresa Lucotti-Bildik, local taxpayer advocate for the Internal Revenue Service in South Florida.

Why? The majority of Americans will not find it worthwhile to itemize deductions including mortgage interest on their taxes, taking some steam out of one longstanding incentive to buy a home, she told a gathering of municipal leaders in Palm Beach County.

“Time will tell,” Lucotti-Bildik said. “It’s still the American dream to buy a home, and that won’t go away.”

Certainly tax deductions are not the only factor when someone is considering a home purchase, said Wellington mayor Anne Gerwig.

But here is another, she said: Whether the potential buyer thinks home values will rise.

Buyers, particularly of higher-end homes, are more likely to hesitate “if the property values aren’t going up,” Gerwig said. “That’s the key to the whole thing.”

On the other hand, lower tax rates tend to help upper-income residents most, the folks most likely to buy the most expensive homes in the first place. Leaders in affluent communities such as Palm Beach and Manalapan said they will have to wait and see about the net effect.

Congress passed the biggest tax changes since 1986 in December, lowering the tax rate permanently for corporations and temporarily for individuals in several tax brackets. They add about $1 trillion to the debt over a decade according to congressional budget forecasters. President Donald Trump promptly signed it, emphasizing projections of higher economic growth.

Property taxes pay a big role in paying for schools and local government services, noted U.S. Rep. Lois Frankel, D-West Palm Beach.

With reduced incentives to buy a home, “that’s something you’ll have to keep your eye on,” Frankel told local government officials in a meeting she hosted Wednesday afternoon.

The National Association of Realtors warned property values were likely to drop in every state under early versions of the tax bill . After the final version passed with changes, the group said “some local markets, particularly in high cost, higher tax areas, will likely see price declines as a result of the legislation’s new restrictions on mortgage interest and state and local taxes.” Overall, NAR projected projected “slower growth in home prices” of 1 percent to 3 percent in 2018 “as low inventories continue to spur price gains.”

Mortgage interest deductions will be capped at properties worth up to $750,000, down from $1 million. The property tax deduction will drop to $10,000. Meanwhile, the standard deduction for all taxpayers will almost double to $12,000 for single filers and $24,000 for joint filers, meaning fewer people are likely to itemize.

About 30 million U.S. households that itemize today are expected to take the higher standard deduction instead. In all, more than 90 percent of households are projected to take the standard deduction.

That could simplify their tax returns. Whether it complicates life for local governments is what concerns mayors now.

Reader Comments ...

Next Up in Local

‘You can make your days count’ — Billy Graham’s message in WPB address
‘You can make your days count’ — Billy Graham’s message in WPB address

Evangelist Billy Graham, who died Wednesday at 99, spoke of life’s brevity when he addressed then-Palm Beach Atlantic College’s graduates in West Palm Beach in 1997. “Not one of us at any age has a clue as to how long we will live. You can’t count your days. But you can make your days count,” Graham, then 78, said. &ldquo...
Boynton Beach has timetable for final downtown pitch
Boynton Beach has timetable for final downtown pitch

Boynton Beach’s 16-acre Town Square redevelopment plan received another nod of approval from city commissioners, but not from all. Commissioner Mack McCray voted against the project because he doesn’t know how the city will pay for it and Commissioner Joe Casello is still not happy with the location of the new police station at High Ridge...
Fair housing group sues owner of Boynton complex for discrimination
Fair housing group sues owner of Boynton complex for discrimination

The owner of a small apartment complex in Boynton Beach has been sued by a fair housing group, claiming he refuses to rent to families. In the lawsuit filed in U.S. District Court on Wednesday, the Fair Housing Center of the Greater Palm Beaches accuses Alan Beigel, owner of BB Apartments on Southeast Third Avenue, of violating the Federal Housing...
Broward school shooting: Walkouts, demonstrations dot South Florida
Broward school shooting: Walkouts, demonstrations dot South Florida

Throughout Palm Beach, Broward, Martin and St. Lucie counties, students took to social media and showed the many ways they were remembering those killed in the Marjory Stoneman Douglas High School shooting on its one-week anniversary. On Wednesday at 10:17 a.m. -- a full week to the minute of the shooting which took 17 lives in Parkland -- there was...
UPDATE: More than 1,000 students march on Boca Raton City Hall
UPDATE: More than 1,000 students march on Boca Raton City Hall

At least 1,000 students from Boca Raton High School, Boca Raton Middle School, Omni Middle School, Olympic Heights and West Boca Raton High School converged at Boca Raton City Hall to urge for gun control. Nicole Auchinleck, a 17-year-old at Boca Raton High, said she helped coordinate the massive rally using the social media app Snapchat.  &ldquo...
More Stories