SAN JOSE (CBS SF) — President Trump’s new tax plan could deal a heavy blow to some Bay Area homeowners, according to tax specialists.
The plan eliminates several itemized deductions, including those for property and state taxes which could add thousands to people’s annual tax bill.
Annette Nellen is a CPA and director of the graduate tax program at San Jose State University.
“That can be a big hit to individuals, especially in California,” confirmed Nellen. “We’re a high-tax state and property taxes are high too.”
Nellen said other aspects of the Trump plan might make up for those losses in some cases.
She explained that a couple with a combined income of $150,000 and a $600,000 mortgage might actually see their overall taxes go down.
“He does talk about doubling the standard deduction. For a married couple, that would mean going from about $13,000 to $26,000,” said Nellen. “There’s a good chance for a lot of people who make between $60,000 to $150,000 that their itemized deductions are less than that.”
But several taxpayers KPIX 5 talked to are not happy to be losing the popular property tax deduction.
Dean Sherrell lives in Hercules and is about to open a small coffee shop in downtown San Jose. He says that deduction is most needed in California.
“We’re in an abnormal area,” said Sherrell. “California is a different beast so making one broad spectrum change in tax code doesn’t fit for us or maybe places like New York where real estate prices are completely different from the rest of the country.”
Trump’s plan would still allow itemized deductions for mortgage interest and charitable contributions and it would have three tax brackets of 10, 25 and 35 percent. However, it is still not known what the brackets income levels would be.