“In Aspen, Colorado, as much as 70 percent of second homes are purchased with cash”, so the interest deduction is irrelevant, said Tim Estin, a broker with Aspen Snowmass Sotheby’s International Realty. “Our market relies on the winds of the ultra-rich, who will be getting a reputed tax break anyway that should more than make up for the loss of the mortgage deduction,” said Estin, who writes the Estin Report on the Aspen market. “For the rich, a mortgage is more a source of cheap funds – bankers line up to loan them real estate money in the hopes of relationship building – and the deduction aspect is almost ancillary.”
Link to article by Rob Urban and Prashant Gopal, Bloomberg News, November 10, 2017
In second-home markets across the U.S., from Cape Cod in Massachusetts to Lake Tahoe, California, brokers are bracing for a hit. A House version of the tax plan, passed by the Ways and Means Committee on Thursday, cuts the mortgage-interest deduction on second homes, and on home-equity loans, which buyers sometimes take out on their primary residence to pay for a vacation property. The Senate’s plan, details of which were released late Thursday, also does away with the home-equity deduction, but preserves the break for second-home mortgages…
In Aspen, Colorado, as much as 70 percent of second homes are purchased with cash, so the interest deduction is irrelevant, said Tim Estin, a broker with Aspen Snowmass Sotheby’s International Realty.
“Our market relies on the winds of the ultra-rich, who will be getting a reputed tax break anyway that should more than make up for the loss of the mortgage deduction,” said Estin, who writes the Estin Report on the Aspen market. “For the rich, a mortgage is more a source of cheap funds – bankers line up to loan them real estate money in the hopes of relationship building – and the deduction aspect is almost ancillary.”
Link to article by Rob Urban and Prashant Gopal, Bloomberg News, November 10, 2017
My actual 11/08/17 comment to the journalist was:
“I think initially – if the 2nd home mortgage deduction were done away with – there may be some fallout… a holding back in purchasing, a pause, while buyers sort the changes out – but longer term, Aspen real estate is not likely to be adversely affected. Reasons? 1. Historically, something like 65-70% of our deals are cash and not mortgage dependent. In the past 12 years, I’ve done 2 mortgage deals only, the rest all cash at closing; 2. Our market relies on the winds of the ultra rich who will be getting a reputed tax break anyway that should more than make up for the loss of the mortgage deduction. 3. For the rich, a mortgage is more a source of “cheap funds” – bankers line up to loan them real estate money in the hopes of relationship building – and the deduction aspect is almost ancillary, although, of course, contributing to even cheaper funds.”
