House Republicans have introduced a new tax plan and according to San Diego Tribune, if approved it could mean big changes for homebuyers around San Diego County. 

The biggest change would be the lowering of annual mortgage interest deductions on new loans totaling no more than $500,000, down from the current $1 million number. Considering San Diego County has a median home price of $535,000 and buyers usually put no more than 10 to 15 percent down, most won’t be affected. However, luxury buyers would see fewer tax benefits in their purchases. 

As noted by San Diego senior mortgage consultant Matthew Shaver of Finance of America, the tax plan would still allow write-off deductions up to $500,000 for those with larger loans. Of the 32,900 homes sold in the region this year, 17,862 have sold for over $500,000.

There are also other potential benefits or concerns within the plan. Taxpayers would be prevented from deducting state and local income as well as cap property tax deductions at $10,000. However, it would also double the standard deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples.

Both high prices and high demand are expected to continue due to low housing inventory, regardless of any reduction in taxes. However, the real estate industry has opposed the tax plan, fearing it may reduce the benefits of ownership while simultaneously lowering housing prices.