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Make no mistake: The Trump-GOP tax plan is a declaration of war on homeowners, homebuilders, realtors, and the mortgage industry. With seven different provisions that will put pressure on home values, it’s hard to imagine that the plan will not cause a crash in the housing market.

Wait, seven separate provisions unfavorable to homeowners? But Trump’s blueprint for tax reform recognized the societal value of home ownership, right?

Well, that blueprint was less than candid. Surprised?

Here are those seven provisions:

One: The plan raises the threshold for deducting home mortgage interest. By nearly doubling the standard deduction, the plan reduces the amount by which mortgage interest and property taxes, when combined with other itemized deductions, will translate into a reduction in taxable income.

Two: The plan eliminates other itemized deductions, most notably state and local income taxes. That reduces the amount by which mortgage interest, property taxes, and the other few remaining itemized deductions exceed the standard deduction. The net effect is a further reduction in the tax benefit associated with home mortgage interest and property taxes.

Three: The plan cuts in half the maximum mortgage loan on which interest is deductible at all. The impact of this at the higher end of the housing market will be immediate and potentially devastating, as it could increase the annual after-tax cost of home ownership by 50%. The middle and lower end of the market will feel the effect as well, as the market softening at the top cascades down to the lower levels.

Four: The plan eliminates entirely the deduction for mortgage interest on a second residence. The markets in vacation and snowbird communities could see immediate softness because of this.

Five:  The plan moves the goalpost for avoiding tax on the gain from selling a personal residence. Under current law, homeowners who sell after two-years of occupancy avoid tax on up to $500,000 of gain for a married couple. Under the Trump-GOP plan, anyone who sells before living in a house for five years will not qualify for the gain exclusion. According to the National Association of Home Builders, 26% of homebuyers, and 28% of first-time homebuyers, move out before the end of five years.

Six: The plan will phase out the benefit of the exclusion from income for gain on the sale of a personal residence for those with higher incomes.

Seven: President Trump’s plan includes a special low maximum tax rate of 25% for certain types of income, including income from housing rentals. Because it’s the after-tax return that matters to an investor, owners of rental housing will be able to offer lower rates to renters, which will mean the cost of renting will decrease relative to the cost of owning. While this change also could mean investors will be willing to pay more for housing units, it’s not likely to help homeowners, because there is limited overlap between the markets for rental housing (think apartments) and owner-occupied housing.

So, if the Trump-GOP tax plan passes, how soon will we see it reflected in home prices? Hard to say for sure, but it brings to mind what the monkey said when he got his tail caught in the lawn mower:

“It won’t be long now.”

Bob Lord is an associate fellow at the Institute for Policy Studies.

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