While a new year often brings about new changes, 2017 is shaping up to be a year of many significant adjustments, due in large part to President-Elect Trump’s new policy proposals, specifically his tax plan. If you’d like to learn more about his tax proposals, check out our December article highlighting major changes for individuals and businesses here. However, Trump’s plans have the potential to cause more shifts than just tax cuts; researchers believe it could have a notable impact on the housing market, more specifically on mortgage interest deductions.

Under current laws, many filers itemize their deductions rather than taking the standard deduction of $6,300 in order to receive better tax breaks. But, under Trump’s plans, standard deductions would rise for both individual filers and those filing jointly. Single filers could see a rise in exemption from $6,300 to $15,000 and joint filers could see a rise double that, at $30,000. So, those paying $10,000 in mortgage interest would have done well to itemize in past years, but under Trump’s new proposals, in many cases, taxpayers would do better to take the new standard deduction rather than itemizing. While this would simplify their filing process, it could cause the housing market to take a hit. If homeowners no longer have an incentive to itemize and deduct their mortgage interest, then many may feel that renting is just as beneficial as buying.

Many economists argue that mortgage interest deduction does not actually motivate individuals to buy homes, rather, it just encourages them to spend more or buy larger homes. Though this could be true, time will tell if homeownership increases or decreases under these changes. One positive the market may have to look forward to is lower tax rates for all, which could encourage individuals to spend more money on a variety of things, including housing. Trump’s tax changes have the potential to affect a variety of different markets, but his proposals are ever changing and still being ironed out in some places. While current homeowners may have nothing to worry about, future homeowners may want to see what unfolds before purchasing a home in 2017.