Depending on what it looks like if and when it’s actually approved, the GOP tax plan currently circulating in Washington, D.C. could have major effects on homebuyers and sellers alike. The effects of this plan will largely depend on where you live and which tax bracket you’re in.

While there are tons of variables and specifics to be hammered out, here are a few ways that, if passed, the new tax system could bring big changes to the housing market.

Mortgage Deduction Change

The most striking aspect of the proposal concerning homebuyers would be the lowering of the annual mortgage interest deduction from $1,000,000 to $500,000. Let’s say you’re buying a house for $800,000. Under the current tax plan, you would be able to deduct the entire $800,000 from your taxable income. However, if the new plan is enacted, you could only deduct $500,000 of that. Obviously, this change that will have a bigger impact on high-end and luxury buyers, not to mention markets where the median home price is near or above $500,000.

If you’re hoping to beat the clock on that potential change, it’s already too late. As of right now, the change retroactively goes into effect on any mortgage used to purchase a home from November 2, 2017 and beyond. Only mortgages that originated before that date and refinanced mortgages on homes bought before then are grandfathered in at the previous interest deduction number.

Another change in the deduction laws would limit the number of residences you could claim it on. Right now, you could apply the mortgage interest deduction to multiple home purchases, such as a second home or that vacation home in Napa. Under the new rules, the deduction only applies to your principal residence. Again, this is something that’s going to affect higher-income buyers more so than the average buyer, but it may also cause potential real estate investors to pump the brakes.

Tax Benefits of Sales Will Change

On the flip side, sellers will also feel the effects of potential changes, perhaps nowhere more clearly than in the tax benefits they’re accustomed to receiving on home sales. Right now, you can write off up to $250,000 ($500,000 as joint filers) from your gross income when selling a house. This is a deduction that you can take once every two years so long as you can prove the home was your primary residence for two of the last five years.

Under the new plan, you’ll have to prove that the home in question was your primary residence for at least five of the last eight years in order to qualify for the deduction. Also, you’ll only be able to take the deduction once every five years. On top of all that, the tax benefit is limited based on your gross income level. If you make $300,000, you can claim the entire $250,000 exemption, but if you make $100,000, you can only claim $150,000 of the exemption (your lower income is subtracted from the $250,000 base).

You could make the case that, in this situation, higher-income sellers make out better than lower-income ones because they’re entitled to a bigger tax deduction. 

Home Prices Could Fall

Home prices have been rocketing upward for some time now in just about every major market, whether you’re talking about houses or condos. Every time it seems like there might be a good reason for prices to stall, it never quite happens. Plenty of cities across America are dealing with prices that haven’t been this high since before the recession.

According to some experts, however, the changes to the mortgage deduction and tax write-off rules could affect housing prices, especially those close to the $500,000 range. Why buy a house for $600,000 when you can’t write-off that last $100,000 when you can get a perfectly good house for $500,000 and reap all the tax benefits? It might not be a massive effect, but don’t be too surprised to see prices stall for a bit while buyers and sellers adjust to the new normal.

For the seller, tax changes might also cause them to wait a little bit longer to enter the market. Without the incentives, the idea of selling a cheaper home in order to buy a more expensive home would become more daunting. Instead, we could see owners opt to refinance or take out a loan in order to improve the house they’re currently in rather than trade up. 

Of course, doing so could remove inventory from a market already struggling to meet demand, which could result in higher prices. However, if both sellers and buyers become hesitant, we could see the market stabilize, if just slightly. 

Major Cities Could See Buyers Leave for Cheaper Pastures 

Right now, San Jose, San Francisco, Los Angeles, and San Diego all have median home values that exceed the proposed mortgage interest deduction limit. In fact, more than 90 percent of the homes currently for sale in San Jose are selling for $500,000 or above.  while that number only drops to 80 percent for SF. Meanwhile, more than one-third of the housing inventory in D.C., New York City, Seattle, and Boston are valued over $500,000.

Most of these markets were already experiencing a serious outflux of residents who can no longer afford to live there. By dropping the mortgage deduction, that trend will likely continue and perhaps even speed up. Whether that means buyers flock to other cities or the suburbs remains to be seen.

Renters Might Find it Easier to Become Owners 

One group of taxpayers who might see a big boost from the new plan is renters. Because they’re unaffected by the mortgage changes but benefit from a doubling of the standard deduction that comes with the new plan, renters would have more money that they can then use to buy. Assuming that prices come down because of the aforementioned factors, that means they could end up seeing a friendlier housing market.

We know that down payments are often what hold millennials back from being able to get into a starter home, not to mention all that avocado toast, so a tax plan that puts more money in their pockets could be the difference between renting until they’re 40 and getting into the housing market much sooner. So long as the new home has a yard for their dog.