In the News

Today, Congressman Gerald E. Connolly (D-VA), Vice Ranking Member of the House Oversight and Government Reform Committee, released a new congressional report that found the Republican tax law will disproportionately hurt Northern Virginia homeowners, especially those with home equity loans. The report, prepared by the Democratic staff of the House Oversight and Government Reform Committee, details how the new law’s changes to the mortgage interest deduction, home equity loan deduction and state and local income tax deduction will result in tax increases for families in the region.

“The Republican tax scam will hit most Northern Virginia taxpayers hard in their pocketbooks, especially local homeowners who will now be forced to pay more for their greatest asset – their home,” Connolly said. “While President Trump and Republicans in Congress gave their billionaire friends a giant tax cut, more than 174,100 Northern Virginia families will no longer be able to deduct their full property taxes next year. On top of that, 106,8000 families can no longer claim full home equity interest deductions.”

The report found:

• None of the approximately 547,600 homeowners currently living in Northern Virginia will be allowed to claim deductions for interest on home equity loans they use for any purposes other than home improvement.
• Beginning in 2018, about 106,800 homeowners in Northern Virginia with existing home equity loans will not be allowed to claim full home equity interest deductions as they did in the past.
• Under the new tax law, about 174,100 homeowners in Northern Virginia will lose the ability to deduct the full amount of their property taxes because their combined state and local tax deductions are more than $10,000.
“Coming from local government, I know how important the housing market is to our community. We should be protecting that investment,” Connolly added. “This law has serious consequences for our community, and puts additional pressure on local governments, our first responders, and our education system.”

Homes are often the largest source of savings for American families, and home equity loans are often the most affordable way for these families to obtain credit. In addition to taking out primary mortgages, homeowners generally may borrow against the equity in their homes by refinancing their primary mortgages to access additional funds, taking out second mortgages, or obtaining Home Equity Lines of Credit (HELOCs) to withdraw funds up to certain limits.

Under the new tax law, homeowners are now prohibited from deducting interest on home equity loans if they use those funds for unexpected medical emergencies, to pay for college education, or for any purpose other than home improvement. This retroactive provision applies even to future interest payments on loans taken out by homeowners in the past. Homeowners also are no longer allowed to deduct property taxes on their homes to the extent that state and local taxes, including property taxes, are more than $10,000.

Finally, under prior law, about 520,600 homeowners in Northern Virginia could deduct their property taxes, claiming an average deduction of about $6,089. Under the new tax law, however, about 174,100 homeowners in Northern Virginia will lose the ability to deduct the full amount of their property taxes because their combined state and local tax deductions are more than $10,000.



A full copy of the report can be found here.

There was bipartisan opposition to the Republican tax law and it was opposed by all of the region’s Democratic members of Congress. You can see how each member voted here.

In November, Connolly held a roundtable with local realtors and community stakeholders to highlight the consequences for our region from the tax proposal.