Senate tax bill draft holds the SALT, boosts child credit
Republicans on the U.S. Senate Finance Committee did not propose changing the cap on state and local tax deductions for homeowners despite pressure from some conservatives in the House of Representatives to quadruple its size.
The committee’s draft text for President Donald Trump’s so-called “One Big Beautiful Bill,” released Monday, leaves the deduction cap for most tax filers at $10,000, at least for now. There was no limit on such deductions before Trump signed the 2017 tax bill. Representatives from high-tax, high property-value states like New York want to raise the cap to $40,000. Rep. Mike Lawler (R-New York) promised Monday to vote against any bill that does not include this provision.
“That is the deal and I will not accept a penny less,” he said on his X account Monday.
Raising the cap could give a boost to the luxury home market by giving owners an incentive to trade up to a larger home, analysts told Homes.com last month. But a higher deduction costs the federal government more revenue.
The Senate committee also proposed increasing the child tax credit, currently capped at $2,000 per child, to $2,200. House Republicans had called for increasing the credit to $2,500 through 2028.
The House passed the tax bill by one vote in late May. The Senate is trying to pass its version of the bill by the July 4th holiday.
GSE privatization should proceed with caution, housing advocates say
It’s time to privatize mortgage giants Fannie Mae and Freddie Mac, but any effort to do so should ensure careful regulation to protect lenders and consumers, the National Housing Conference said in a report Tuesday.
The two companies buy home loans from banks and sell them to investors as securities, generating funding that allows lenders to issue more loans. Fannie and Freddie support around 70% of the mortgage market, according to the National Association of Realtors. When their stability was in question during the economic turmoil of 2007-2008, Congress passed a law that enabled the federal government to regulate them directly. Recently, the Trump administration has suggested that returning the companies to stockholder control would benefit the public.
Before that happens, the U.S. should ensure that consumers continue to have safe and sound access to mortgage credit, the NHC said. The report also says the government should implement something better than an “implicit guarantee” to protect lenders and investors if another economic collapse occurs. Some experts suggest that if the government provides a more explicit guarantee, it could lead to new fees for homebuyers or higher mortgage rates.
“A statutory full faith and credit guarantee is politically unfeasible for the foreseeable future,” the NHC said. “It is important to emphasize that no one can be certain of the outcome.”
The report also calls for an independent board of directors that acts in the best interest of shareholders. Fannie and Freddie currently lack that model since the Federal Housing Finance Agency regulates them directly.