July 15, 2025
If you note, we left one adjective off the description of the bill which is now set to become law, it is because we are not here to assess whether the legislation is “good or bad” — but to assess the potential effects of the law on the real estate market. During this assessment, we will mostly avoid more general concerns such as to how the general economy may be affected positively or negatively, though we do add some conjecture in our closing.
On the other hand, there are plenty of more direct correlations between the legislation and the real estate market. For example, the increase of the allowable deduction of state taxes from $10,000 to $40,000 will enable more Americans to take advantage of the tax benefits of real estate, especially in areas of high property taxes — though the provision is not permanent. The permanent extension of the mortgage insurance deduction is another win for real estate. This provision expired a few years ago. In addition, other real estate tax provisions such as like-kind exchanges (1031) were kept in place, positives for real estate investors.
The significant defunding of the Consumer Protection Bureau is one change which has mixed potential. On the one hand, it has the potential to allow lenders to take more risks in mortgage lending, keeping in mind that the restraints of the overall Dodd-Frank legislation still stand. Will these risks taken cause long-term danger to the real estate sector in a replay of the 2008 subprime crisis? That remains to be seen, though hopefully we have learned our lessons in that regard. Overall, the lower tax rates will help the economy in the short-run, but the deficits which are likely exacerbated could lead to higher interest rates in the long-run.
Source: Origination Pro
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