A new report says the Republican tax bill nearing passage in Congress could end up slicing 3 to 6 percent from home prices here in Evanston.
The study from Moody’s Analytics reported by Slate says that parts of New York and New Jersey will fare even worse with housing value declines of around 10 percent, and that some outer ring Chicago counties could see declines of 7 to 9 percent.
The damage is expected to be greatest in areas that have both high state income taxes and high home values, because the bill limits deductions for property taxes and state and local income taxes to a total of $10,000.
The pain may be ameliorated for owners of more modestly priced homes — because the bill also doubles that standard deduction — meaning many lower-income residents will be less likely to choose to itemize deductions in the first place.
Some observers believe the change will also make it harder for local governments to raise taxes in the future as higher-income residents respond politically to the shock of seeing their federal tax deductions reduced — leading to reductions in services.