The nation's 1991 deficit-reduction package will make real estate a slightly less attractive tax shelter for the most affluent families while continuing incentives for low-income housing, according to accountants and tax experts.
The legislation leaves in place the deductibility of mortgage interest and local property taxes, but starting next year, taxpayers will have the amount they can claim for those and other itemized deductions reduced by 3 percent for every dollar of income above $100,000.
Real estate-related deductions will become slightly less valuable to those at the upper end of the income spectrum.
For families with incomes below $100,000, however, the full amount of their mortgage payments and property taxes will remain deductible.
"Many people will be paying higher taxes and getting less deductions," said Jeffrey Perone, a tax partner in Deloitte & Touche, one of the nation's largest accounting firms. "The higher your income, the bigger the bite."