The House GOP talking points for its tax bill says it would cap the mortgage interest deduction for newly purchased homes at $500,000 — a departure from the current cap of $1 million for couples filing jointly.
The home mortgage deduction for existing mortgages would be preserved, according to the two-page outline of policy highlights obtained by Bloomberg News.
The White House and GOP leaders had said repeatedly that the mortgage interest deduction would be preserved for homeowners.
The SPDR S&P Homebuilders exchange-traded fund, ticker XHB, and an S&P index that tracks builders plunged in early trading. If the losses hold, it would be the worst day for both in more than a year.
The luxury homebuilder Toll Brothers Inc. fell as much as 7.3 percent, and the retailer Home Depot Inc. also saw heavy losses.
The tax tweak, if implemented, will acutely affect new buyers and builders in the Northeast. According to the U.S. Census Bureau, the median selling price in that region last year was $428,200 — roughly $150,000 more than the Midwest and South, and $60,000 higher than in the West.