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If congressional Republicans do succeed in capping or eliminating the federal deduction for state and local taxes as well as mortgage interest, then a big winner in the resulting fallout could be apartment landlords in the Boston area.
It’s like this: In a high-cost area such as the Boston region, many homeowners take advantage of federal deductions of local property levies as well as deductions of interest paid on often hefty mortgages. Take away those deductions, and high costs become that much higher (they also exacerbate other high costs such as child care).
Such increases would wipe out one of the key advantages—and spurs—to owning rather than renting.
Couple that with the general uncertainty that the tax changes would bring, and it’s enough to make prospective buyers sit on the sales sidelines and wait until things shake out.
In the meantime, those prospective buyers will move into the already tight rental market to find a place to live. This new demand will surely drive already-high Boston-area rents that much higher—and, viola, a tasty treat for landlords, but bad news for prospective and existing tenants.
Of course, there is a flipside to this: Fewer prospective buyers should mean prices drop, which would upend a sales market that has become one of the most expensive in North America in the past 20 years.
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