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How Trump tax plan would alter mortgage interest deduction

WASHINGTON — Each year, taxpayers subsidize America's homeowners by roughly $70 billion, with the benefits flowing disproportionately to coastal areas with high incomes and pricey homes, from New York and Washington to Los Angeles and San Francisco.

The subsidy for homeowners comes in the form of a deduction from their taxes for the interest they pay on their mortgages. An affluent New Yorker, for example, would have saved an average of $3,694 in 2015, according to an analysis of IRS data released Wednesday by the real estate company Apartment List. In metro Los Angeles, the deduction was worth an average of $4,568, in San Francisco still more: $5,500.

But under President Donald Trump's tax proposal, some Americans would likely be steered away from this tax break. Here's why: Trump's plan would double the standard deduction, which taxpayers can take if they don't itemize deductions. The doubled standard deduction could exceed the savings many receive now from itemizing their expenses for housing, state and local taxes and related costs.

But the Trump plan would also eliminate many existing itemized deductions, including those for state and local taxes, so that some people who now itemize might end up paying more.

The president's proposal would essentially marginalize the use of the mortgage interest deduction, which is the government's primary form of direct housing assistance: It distributes three times more money this way than it does in the form of vouchers for impoverished renters.

Trump administration officials say their tax plan is designed to benefit the middle class. Yet it's not clear from the scant details of the framework released so far how many families would enjoy lower tax bills and how many would face higher bills.

Even though the Trump measure would preserve the mortgage interest deduction, it's confronting resistance from the real estate industry because it would likely reduce the number of people seeking the deduction.

Estimates by the real estate firm Zillow suggest that someone buying a home worth at least $305,000 today would still qualify for the deduction. But under the Trump plan, only homes worth $801,000 or more would receive the deduction.

This has led the industry to push back against the plan.

"We don't want to go backwards — we don't want to lose what incentives that we have," said Jamie Gregory, deputy chief lobbyist for the National Association of Realtors.

The National Association of Homebuilders says it might be open to eliminating the mortgage interest deduction so long as homeownership was protected elsewhere in the tax code through the use of a possibly more generous tax credit. (A credit, which is subtracted from the amount of tax someone owes, is more generous than a deduction, which reduces the amount of income to be taxed.)

The advantage of moving to a credit is that more homeowners would be eligible to claim it than the 34 million who receive the mortgage interest deduction, said Rob Dietz, the homebuilder association's chief economist. But there are no signs that the idea of a credit has gained traction within Congress or the White House.

Trump proclaimed in June that his tax plan would accelerate economic growth to ensure that "hard-working Americans enjoy a fair chance at becoming homeowners."

Chris Salviati, a housing economist at Apartment List, noted that the main effect of the mortgage interest deduction is to enable people to spend more on homes rather than to increase ownership, which is near a 51-year low.

Though the benefits of tax breaks for housing skew most toward people in the top 20 percent of income, they also tend to help middle class Americans. Roughly half the households in metro Washington with incomes between $74,000 and $112,000 — a group that could be considered middle class in that area — take the mortgage interest deduction and saved an average $2,530 in 2015. The average home price in the Washington area is just below $400,000.

Areas with lower home values tend to benefit less from the deduction. A similar group of middle-income households in Indianapolis — where the average home cost around $140,000 — saved only $655 on average in 2015, and just 19 percent of them took the deduction. The savings for middle-income households are just $691 in Cleveland, $666 in Little Rock, Arkansas, and $673 in Memphis, Tennessee.

Yet the Apartment List analysis also indicates that Trump's tax plan would do little for lower-income households. A mere 11 percent of households with income below 80 percent of the national median qualify for the mortgage interest deduction or rental housing vouchers.

Olive L. Blair

BLAIR, Olive Lillian, 94, passed away Friday, Oct. 6, 2017. No calling hours. Funeral service at 11 a.m. Saturday, Oct. 14, 2017 in St. Alphonsus Church. Burial in St. Joseph’s Cemetery, Fleming, N.Y. Arrangements are with Langham Funeral Home LLC.

Dillon Mathew Swann

MONTEZUMA — Dillon Mathew Swann, 26, of Montezuma, passed away unexpectedly early in the morning of Oct. 9, 2017 surrounded by his caring family.

He is deeply loved by all his family and friends. Dillon was a happy person with a good, kind heart. His delightfully entertaining personality always made everyone smile and laugh. Dillon graduated from Port Byron High School with the class of 2011. Dillon enjoyed playing basketball, fishing, watching Pittsburgh Steelers football, going to the gym and spending time with family and friends. Dillon was an incredible drawer and talented artist.

Dillon is survived by his mother and stepfather, Beverly and Chis Johnson, of Montezuma; father, Duane Swann, of Auburn; siblings, Derek Swann, of Montezuma, Austin Swann, of Montezuma, and Trinity Swann, of Savannah, N.Y.; grandparents, Carol Bracy, of Montezuma, Robert Bracy, of Weedsport, and Daniel Swann, of Auburn, and many aunts, uncles and cousins.

Dillon was predeceased by his grandmother Sharon Swann, of Conquest, N.Y., and great-grandmother, Mary Wright, of Port Byron.

Private services will be held for close family.

Audioun Funeral Home LLC, 218 Main St., Port Byron, has charge of arrangements.

Malcolm Earl Bancroft

KING FERRY — Malcolm Earl Bancroft, 80, of King Ferry, passed away on Sunday, Oct. 1, 2017 in the Palliative Care Unit at Strong Memorial Hospital in Rochester, N.Y.

Mr. Bancroft was born on March 6, 1937 in Cortland, N.Y., a son of Ray and Inez Bancroft. He graduated from King Ferry Central School, as class valedictorian in 1955, and later attended Auburn Community College. Malcolm worked in the sales department for HR Wilson Inc. and for S.K. & M. Implements. He later worked at MacKenzie Childs, creating beautiful wood furniture. Malcolm continued with his woodworking skills as a self-employed carpenter and general contractor. He had a passion for antique tools and a talent at woodworking design, including the art of intarsia.

In addition, Malcolm was very proud to serve his community as a member and treasurer of the King Ferry Fire Department for many years.

Malcolm is survived by his wife of 59 years, Charlotte (Reynolds) Bancroft; five children, Victoria Bancroft (Chris Deys), Randolph (Corey), Sandra Chandler, Russell (Sarah), and Matthew; 10 grandchildren, Nicole Farrell (Sean), Joelle St. Pierre (Aaron), Noah St. Pierre, Christin Chandler, Ashlee Ramirez (Ima), Samantha, Emily, Mackenzie, Erica, and Madison Bancroft, and Sarah Deys, who’d soon have been a step-grandchild; five great-grandchildren, Brayden, Levi, Zachary, Zoey, and Evelyn; two sisters, Carolyn Davis, of Cortland, and Beverly Woodard (Richard), of Michigan; a brother, Marshall Bancroft (Jean), of Auburn; several nieces and nephews, and a close friend, Hans Peter Pecher.

He was predeceased by his parents; sister-in-law, Joan Bancroft; and brother-in-law, Leland Davis.

Family and friends are welcome to attend a Remembrance Reception from 1 to 4 p.m. Saturday, Oct. 28, 2017 at the Fellowship Hall of the West Genoa Presbyterian Church in King Ferry, N.Y.

In lieu of flowers, please consider a donation to your local ambulance, fire department, or cancer center of choice.

Verne Montana

CATO — Verne Montana, 63, of Cato, passed away Sunday, Oct. 8, 2017 at Strong Memorial Hospital surrounded by his family. Verne was born in Auburn, the son of the late Lester Montana and Lena DeLyser Montana.

He was a self-employed farmer in the town of Conquest, as well as an AI technician. He had a passion for woodworking, hunting, music and traveling. Verne also had an interest in researching his family lineage over the years, even connecting with distant relatives abroad. He was an avid collector of antique John Deere tractors and enjoyed driving his 1953 red Chevy truck.

He was a devoted family man who loved spending time with his kids and grandchildren. He dedicated over 30 years volunteering his time in the community and was an assistant chief and lifetime member of the Cato Volunteer Fire Department, past member of the Conquest Fire Department; as well as a past member of CIMVAC Ambulance.

Verne is survived by his wife, Suzanne Petit Montana; a son, Nathan (Kathleen) Montana, of Rochester; a daughter, Erin (Rafael) Larramendi, of Farmington; a brother, Dennis (Marjorie) Montana, of Maryland; his four grandchildren, Chandler and Aiden Montana, Kalyani and Xavier Larramendi; as well as several nieces and nephews.

Calling hours will be from 2 to 4 and 7 to 9 p.m. Friday, Oct. 13, at the Keysor-Dain-Cullinan Funeral Home. A funeral will take place at 11 a.m. Saturday, Oct. 14, in the Cato Christian Fellowship; burial will take place immediately after in the Cato Union Cemetery.

If anyone wishes to make contributions, they can do so to the Cato Christian Church, P.O. Box 176, Cato, NY 13033, the Cato Fire Department, P.O. Box 252, Cato, NY 13033, CIMVAC Ambulance, 2496 W. Main St., Cato, NY 13033, or Lifetime Care Hospice, 3111 S. Winton Road, Rochester, NY 14623.