Question: Will the new tax law increase the cost of single-family residences?
Answer: Tax reform may encourage some people to sell their present home and buy a new, more expensive one. That is because the legislation limits tax write-offs from refinancing their current home to its original cost, plus improvements.
Therefore, the theory goes, that some individuals who would like to borrow with tax deductibility may sell their present homes, which they purchased at a much lower price several years ago, and buy a new home to receive a larger loan commitment and bigger tax deductions.
However, I would caution that upon the purchase of a new home, their tax assessment will be based upon the value of the new house, and their property tax payments will probably be much higher.