Long Island homeowners would be hit by “tax jeopardy” if federal tax deductions for mortgage interest get reduced or eliminated, as the nation’s new Treasury secretary and some members of Congress have proposed, Senate Minority Leader Chuck Schumer (D-N.Y.) said at a news conference Tuesday.
Scaling back those deductions “would hurt Long Island particularly hard, because we all know living on Long Island doesn’t come cheap,” and it would discourage young people from buying homes in the region, Schumer said, standing outside the home of Mindy and Joshua Schreiber, who purchased their three-bedroom house in Seaford last month.
The ability to take federal tax deductions for costs such as mortgage interest and state and local property taxes allows homeowners to pay less in federal taxes.
Joshua Schreiber, a financial analyst, said he and his wife expect to save about $3,000 a year by taking those deductions. “Every little bit helps,” he said. “We’re not rich people; it took a lot to save up to buy a house.”
President Donald J. Trump’s new Treasury secretary, Steve Mnuchin, said in an interview on CNBC last year that the administration would “cap mortgage interest [deductions] but . . . allow some deductibility.” Mnuchin made the comments in November, shortly after the presidential election.
During the campaign last year, Trump proposed raising the standard tax deduction for married couples to $30,000 from the current $12,600, and for single filers to $15,000, up from $6,300.
The Republican-led Congress also supports increasing standard deductions as part of a sweeping tax overhaul. Proponents of the plan say raising the standard deduction would help all taxpayers.
Critics say it would hurt homeowners in areas with high home prices, such as Long Island, since it would reduce tax incentives for home-buyers, causing many households to get the same deductions whether they buy or rent.
If the deductions were cut back, “you would see a slowdown in price appreciation,” Michael McHugh, a Melville-based senior vice president with Freedom Mortgage Corp. and past chairman of the Empire State Mortgage Bankers Association, said in a telephone interview.
The Treasury Department did not respond to a request for comment Tuesday.
Long Island’s housing market plays a significant role in the local economy. More than 80 percent of Long Island households own their homes, compared with the national rate of 63.5 percent, census figures show.
“We are a very high-cost area here,” Peter Elkowitz, chief executive of the Long Island Housing Partnership, based in Hauppauge, said at the news conference Tuesday. “If we are going to keep our families here on Long Island, they count on these funds. We just got over a foreclosure crisis that we’re still trying to finish up, [and] we don’t want to hurt our families even further.”