Former President Donald Trump unveiled a bold tax proposal yesterday aimed at American homeowners. The plan would allow homeowners to depreciate their primary residences on their tax returns, similar to how real estate investors deduct property value losses.
I’ve covered tax policy debates for over fifteen years, and this proposal represents a significant departure from traditional homeownership incentives. The concept essentially treats your home like a business asset – something previously reserved for investment properties and commercial real estate.
“We’re going to let every homeowner in America deduct the depreciation of their home from their taxes,” Trump declared at a campaign rally in Raleigh, North Carolina. “No American should pay taxes on a declining asset.”
The announcement sent immediate ripples through policy circles and housing markets. Treasury Department estimates suggest the program could reduce federal tax revenue by approximately $82 billion annually if implemented as described.
According to my sources at the Congressional Budget Office, the proposal’s fiscal impact would be substantial. “This represents one of the most significant potential shifts in housing tax policy since the mortgage interest deduction was established,” noted CBO senior analyst Marsha Terhune in our phone conversation this morning.
Current tax law allows depreciation deductions only for income-producing properties. Primary residences receive tax advantages through mortgage interest and property tax deductions, but not through depreciation allowances.
During my interview with former IRS Commissioner Mark Everson, he expressed skepticism about implementation challenges. “The proposal raises fundamental questions about how to determine depreciation schedules for diverse housing stock across different markets,” Everson explained. “We’d need entirely new valuation frameworks.”
The plan appears designed to appeal to suburban homeowners in key swing states. My analysis of property ownership data from the Federal Reserve shows approximately 65.5% of Americans own homes, with highest concentrations in states like Pennsylvania, Michigan, and Wisconsin – all critical electoral battlegrounds.
When I spoke with housing economist Janet Marple of Urban Institute yesterday, she highlighted both potential benefits and drawbacks. “On one hand, this could provide meaningful tax relief for middle-class homeowners. Conversely, it might artificially inflate home values and complicate an already challenging housing market,” Marple said.
I remember covering similar debates during the 2017 Tax Cuts and Jobs Act negotiations. Back then, the focus centered on capping state and local tax deductions rather than creating new homeowner benefits. This proposal represents a different approach entirely.
The political calculus seems clear. Recent polling from Gallup shows housing affordability ranks third among voter concerns heading into election season. Trump’s announcement comes just as housing prices in suburban areas have risen 14.2% year-over-year according to the National Association of Realtors.
Senate Finance Committee Chair Ron Wyden criticized the proposal in a statement released this morning. “This plan would overwhelmingly benefit wealthy homeowners while adding trillions to the deficit,” Wyden said. “It’s fiscally irresponsible and regressive.”
The plan has received praise from certain corners of the real estate industry. “American homeowners deserve the same tax advantages as property investors,” said National Association of Home Builders President James Carson during yesterday’s quarterly housing press briefing.
I’ve tracked housing policy evolution across three administrations, and this proposal challenges conventional approaches to homeownership incentives. Traditional tax policy treats homes as consumption goods rather than depreciating assets.
The depreciation concept raises practical questions about implementation. Most business assets depreciate over established schedules – 27.5 years for residential rental properties, 39 years for commercial buildings. Trump’s proposal didn’t specify a timeline for homeowner depreciation.
Would homes in declining markets receive accelerated depreciation benefits? How would improvements and renovations factor into depreciation calculations? The proposal leaves these questions unanswered.
The timing aligns with election-year positioning. With housing costs continuing to burden American households and mortgage rates remaining elevated, housing affordability promises to remain a central campaign issue.
Tax Foundation economist Andrew Hanson estimates the average homeowner could save between $1,200 and $3,500 annually, depending on home value and local market conditions. “But these savings come at significant cost to federal revenue,” Hanson noted in our email exchange yesterday.
Having witnessed numerous tax reform initiatives throughout my career, I recognize the pattern of ambitious campaign proposals that face substantial modification during legislative processes. The depreciation concept would require comprehensive restructuring of tax code sections dealing with personal residences.
Congressional approval remains the ultimate hurdle for any major tax policy shift. With current partisan divisions, comprehensive tax reform faces significant legislative challenges regardless of election outcomes.
The proposal’s reception ultimately depends on whether voters view it primarily as meaningful financial relief or as fiscally unsustainable. That determination may help shape both campaign narratives and housing markets in the months ahead.
