Zillow estimates that many homeowners and renters would use a portion of their potential tax savings from the Tax Cuts and Jobs Act (TCJA) on housing.
Economic research director Aaron Terrazas writes that Americans will spend an extra $24.7 billion on home renovations in 2018, per Zillow Housing Aspirations Report (ZHAR) data. Based on survey data from the report, renters said they would save an average of 11 cents of every dollar in potential tax savings and put it toward either renting or buying a home. Homeowners said they would put aside 15 cents on the dollar toward home renovation projects.
The net effect of the TCJA was to reduce most Americans’ federal tax liability and increase their after-tax income, in large part by lowering marginal tax rates and increasing the standard deduction. Many are likely to spend at least some of these gains, however small, on housing – despite new limits on tax benefits historically aimed at homeowners, including the mortgage interest deduction and deductions for state and local property taxes.