The One Big Beautiful Bill Act (OBBBA), recently signed into law, contains some measures that will help American homeowners.
The piece of legislation officially became law after President Donald Trump signed the package of tax cuts and spending policies on July 4.
One policy within the nearly 900-page bill that homeowners could find helpful is how it addresses the cap on state and local tax (SALT) deductions.
FIVE MAJOR POLICIES TO KNOW FROM THE ONE BIG BEAUTIFUL BILL ACT
In the OBBBA, the limit for SALT deductions was raised to $40,000 for five years, much higher than the $10,000 previously allowed under the Tax Cuts and Jobs Act that Trump signed in 2017.
That provision includes a “phase down based on modified adjusted gross income” above $500,000, according to the legislation.
“The higher limit on SALT gives homeowners in high-tax states like New York, New Jersey and California more breathing room,” Jenna Stauffer, a broker and global real estate advisor at Sotheby’s International Realty, told FOX Business. “By raising the cap on how much they can deduct for state and local taxes, it lowers their overall federal tax burden. It puts more money back in people’s pockets or, at the very least, it doesn’t take out as much.”
Come 2030, however, the SALT deduction limit will go back to $10,000 unless it is made permanent.
Elsewhere in the OBBBA, lawmakers granted a permanent extension of the home mortgage interest deduction, keeping it at a max of $750,000 worth of mortgage acquisition debt.
Stauffer described this measure as a “big deal.”
“It’s a core incentive for homeownership, and it adds predictability, which is really important when people are deciding whether to buy and how much they can afford,” she explained.
There is also a provision within the OBBBA for the “permanent enhancement” of the Low-Income Housing Tax Credit (LIHTC).
It brought the state allocation ceiling a 12% increase for such rental housing while also making the benchmark for bond-financing down lower, according to reports.
WHAT’S IN THE ‘BIG, BEAUTIFUL BILL’ FOR AMERICAN WORKERS?
According to Stauffer, the permanent enhancement of the LIHTC “could be a tool to help” with America’s lack of affordable housing that has put pressure on home prices.
“It gives developers a reason to build affordable housing by making the economics work,” she told FOX Business. “If we want people to have a shot at affording a home, we need more incentives like this.”
Among the number of policies in the OBBBA, the law creates “Trump Accounts” for American children treated similarly to individual retirement accounts.
The tax-deferred accounts can receive contributions of up to a certain amount each year from parents, other relatives and employers before the child officially becomes an adult at the age of 18, according to The Wall Street Journal.
There are rules about what types of investments the “Trump Accounts” can be invested in.
The OBBBA includes a pilot program through which the federal government will provide $1,000 in funds for accounts belonging to American babies born in 2025 through 2028, the outlet reported.
THE ‘BIG, BEAUTIFUL BILL’ INCLUDES A CAR LOAN INTEREST TAX DEDUCTION. DO YOU QUALIFY?
“One of the biggest hurdles that is keeping people from buying a home is simply coming up with the down payment,” Stauffer said. “So this proposal is interesting because if that money is invested wisely from the start then it could grow over the years into exactly what is needed to help buy a home down the line.”
A survey released earlier in the year by Bankrate found 81% of Americans “who have owned a home in the past or never owned a home but want to some day” called down payments and closing costs a “significant obstacle” to getting one.
Nationwide, the median asking price of a home stood at $440,950 in June, according to Realtor.com.
Read the full article here
