Home builders and the real estate industry remained opposed to a House-passed tax-reform package.

The National Association of Home Builders (NAHB) and National Association of Realtors (NAR) expressed continued concerns about the bill they say will hurt homeowners by rendering housing tax deductions ineffective, which would likely drive down home values and push up prices.

“[The bill] provides a huge windfall to major corporations paid for in large part by millions of working class homeowners, who will see their housing tax incentives severely diminished,” said Granger MacDonald, chairman of the NAHB.

ADVERTISEMENT

“The bill effectively renders mortgage interest and property tax deductions unusable for middle class home buyers and homeowners,” Granger said.

“By threatening the value of the largest asset held by most Americans, these changes will hurt the middle class by lowering household wealth.”

The proposed legislation would cap the deduction at $500,000 for new home purchases, a drop from $1 million in current law.

The tax deduction is viewed as a key incentive to encourage home buying.

The House passed the tax measure 227-205 without any Democratic votes, while 13 Republicans defected.

Builders said the House measure also diminishes the effectiveness of the Low-Income Housing Tax Credit (LIHTC), which is needed to spur the production and rehabilitation of affordable rental housing.

Builders and the real estate industry say they are looking toward the Senate to craft a better tax package.

NAR President Elizabeth Mendenhall called the House bill an all-out assault on homeownership and taxpayers.

“It's disappointing to see this legislation move forward, but the real work to shape this debate is just getting started,” Mendenhall said.

"This is about much more than a cap on the mortgage interest deduction," she said.

“Rather, it is about whether homeowners will have the rug pulled out from under them with a tax system that suddenly favors renting over owning in a big way.