Tax Reform Bills' Impact On Homeowners

CHICAGO (CBS) -- The House and Senate are gearing up to combine their tax reform bills now that the Senate has passed their version.

The Senate narrowly passed Republicans' tax reform legislation early Saturday morning with no Democratic support, following a marathon voting session overnight, CBS News reports.

Republicans hope to come to an agreement and get a bill on President Donald Trump's desk by Christmas. Trump praised the bill's passage in a Saturday morning tweet.

Meantime, a lot of homeowners have questions about how a tax change will impact them. For some, several deductions we've come to depend on could disappear. So, who's going to take the biggest hit?

"We don't know what the end effect is going to be, because we don't know exactly what the bill is. The impact is on a small percentage of homeowners," said Laura Ellis, of Baird & Warner Real Estate.

Ellis is referring to homeowners who pay more than $10,000 in property taxes. According to the National Association of Realtors (NAR), that represents about 10 percent of homeowners in Illinois. Proposals by both the House and the Senate put a $10,000 cap on the deductible.

"So, if you have a $20,000 property tax bill on your home, you're only allowed to deduct up to $10,000," Ellis said.

New homebuyers will face another cap. For example, if you get a mortgage at $499,000 with a 30-year fixed at four percent, your deductible interest would be about $19,000 -- and you can claim it all. However, if you're paying on a $750,000 house, and everything else is the same, but your deductible interest is about $29,000, you'd still only be able to deduct $19,000.

Wealthy buyers get hit.

Bottom line? Whether lawmakers adopt the House or Senate proposals, current homeowners don't have to worry about a limit on their mortgage interest deductions -- they will be grandfathered in. You only face limits if you buy a new home with a mortgage over $500,000.