EXECUTIVE SUMMARY
Homes are often the largest source of savings for American families, and homeowners
generally build equity with each mortgage payment they make. Since Congress enacted a federal
income tax more than a century ago, homeowners have been allowed to deduct interest on their
home loans, as well as on property taxes on their homes.
On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act. The
new tax law imposes significant new financial penalties on American homeowners across the
country, while essentially using the funds raised by these tax increases to help pay for over $60
billion in lucrative new tax breaks for real estate developers. No Democratic Members voted in
favor of the bill.
Under the new tax law, homeowners are now prohibited from deducting interest on home
equity loans if they use those funds for unexpected medical emergencies, to pay for college
education, or for any purpose other than home improvement. This retroactive provision applies
even to future interest payments on loans taken out by homeowners in the past. Homeowners
also are no longer allowed to deduct property taxes on their homes to the extent that state and
local taxes, including property taxes, are more than $10,000.
This staff report was prepared by the Democratic staff of the House Committee on
Oversight and Government Reform at the request of Ranking Member Elijah E. Cummings. It
summarizes the specific effects of the new tax law on homeowners across the United States
based on multiple sources of data. The report finds:
• None of the approximately 75 million homeowners in the United States will
be allowed to claim deductions for interest on home equity loans they use for
any purposes other than home improvement.
• Beginning in 2018, about 10 million homeowners throughout the United
States with existing home equity loans will not be allowed to claim full home
equity interest deductions as they did in the past.
• Approximately 12.5 million homeowners in the United States no longer will
be allowed to deduct their full property taxes.
In contrast, the new tax law grants commercial real estate developers significant tax
breaks worth billions of dollars. Real estate developers are now allowed to take new deductions
on pass-through income, pay dividends that are taxed at reduced rates, take advantage of an
exemption from a provision that otherwise limits businesses from deducting interest, and utilize
another exemption to avoid paying taxes on property exchanges.
• New estimates from the Joint Committee on Taxation conclude that these tax
giveaways to real estate developers total a staggering $66.7 billion in lost
revenue over ten years. Just next year, the windfall for real estate developers
due to these four tax changes will total nearly $3.7 billion.