Illinois homeowners would face a double hit if two key tax provisions are eliminated through a rewrite of the federal tax code, according to Illinois’ REALTORS®‘ Local Government Affairs Director Brian Bernardoni.
Already a point of discussion is the Mortgage Interest Deduction, which homeowners have enjoyed for decades. But the article in Crain’s Chicago Business notes eliminating the state and local tax deduction provisions would particularly hurt Illinoisans, and could send billions of dollars to the federal government.
Since Illinois has among the highest property taxes in the country, the loss of both the MID and the state and local tax deduction could really hurt.
Bernardoni, who also works with the Chicago Association of REALTORS®, said as much as $2.9 billion could go to federal coffers instead of staying in the state if the state and local tax provision was eliminated. In the article, he says:
On top of that, the mortgage interest deduction “is most valuable when you first buy your house and loses its value over time.” Because the early years of payments on a mortgage are mostly interest and little principal, the possible deduction is far larger then than in later years, as the interest portion of the payment diminishes and the principal part grows.
The state and local deduction, though, “gets more valuable over the years, as your home’s value appreciates and the taxes on it go up,” Bernardoni said. “That’s the one that will hurt more homeowners, including people who’ve already paid off the house but still get a property tax bill.”