Trump’s revised tax bill will likely include a tax on foreign buyers of real estate, a move that could potentially make it easier for Americans to own real estate in the United States, Axios reports.
Real estate agents said that the changes will likely increase demand for the rental market, but they will also have a limited impact on the housing market.
“The change is likely to lead to higher prices in the market, because the tax would incentivize people to buy,” said Richard Lass, vice president of market analysis for the real estate research firm CBRE Group.
“The result is that prices would increase, but prices will probably be less than they otherwise would have been.”
The tax, which is expected to be unveiled Thursday, would apply to all transactions between a U.S. citizen and an entity that has more than $10 million in assets in a tax year.
That entity would be considered to be a foreign buyer, meaning the tax is not levied on the transactions between an individual or a family.
The new tax would apply only to the purchase of residential real estate with a mortgage, the agent said.
The tax would be a major boon for Americans who currently are unable to buy a home with a $1.5 million mortgage or less because they are unable, or do not want, to pay income taxes.
The IRS did not respond to a request for comment.
The change could also have an impact on foreign nationals, especially Chinese nationals, who typically do not pay taxes.
If Chinese nationals are allowed to purchase a home in the U.K. with a less than $1 million mortgage, it could be difficult for U.N. Ambassador Nikki Haley to argue that China should be treated differently from the U, Axio reports.
“It will create a major incentive for them to buy here,” said Chris Gresham, the head of real-estate research firm Zillow, who predicted that Chinese buyers of homes in the US would increase.
However, the real-world impact of the tax change would depend on how quickly the U approves the measure.
The U.SEAS Investment Act of 1980 does not allow for deductions for tax on purchases from foreign sources, meaning that Trump would have to enact legislation before he can enact the tax.
“I don’t know that he will be able to make any real changes to the bill at this time,” said William Green, a former deputy assistant secretary of state and a former chief economist at the UESP.
“They’re not going to be able change the whole bill as soon as they want to, because there’s a long time window in which you can’t make any change.”
However, Green said that if Trump does make changes, it would likely be to lower the corporate rate.
The rate of corporate tax would increase from 15% to 21% by 2026, according to the nonpartisan Tax Policy Center.
The Congressional Budget Office has estimated that the corporate tax rate could be 25% or 30% in 2026.
However of course the tax increase could be offset by an additional $4 trillion in revenue that would be used to help fund social programs, according the nonpartisan Joint Committee on Taxation.
In the meantime, the US. has already been able to afford the current levels of mortgage interest and mortgage payments, which have been below inflation for several years.
That means the tax changes could have little impact on housing affordability.
“If the mortgage rate were to go up as much as it is now, the rate would still be lower than it was a decade ago, so the increase in taxes would be minimal,” said Green.