Experts: Republican tax plan could hurt Hawaii real estate industry

HONOLULU (HawaiiNewsNow) - Real estate experts are worrying that the new Republican tax plan could cool off Oahu's heated residential real estate market.

The Trump tax plan lowers the popular mortgage interest deduction from $1 million to $750,000.

While $750,000 can buy a mansion in other parts of the country, that's the median price here on Oahu, meaning that buyers of nearly half the homes sold on the island will no longer qualify for the deduction.

"It will make it harder for buyers to buy a house over that price of $750,000," said real estate expert Ricky Cassiday

Real estate consultant Stephany Sofos worries that the real estate market – which has seen the price of a single-family home go from $575,000 in 2009 to $773,000 last month – could see a slowdown.

"It's huge for anybody buying real estate … If you don't have a homeowner deduction, then why buy," she said.

"We're in our ninth year of expansion. Average cycles are seven years. So we're overdue for a correction."

But Cassiday said the new tax plan has a silver lining. By lowering the tax rate for corporations, the companies and their executives will have more money to invest in businesses here and to buy second homes in the islands.

"It will make more money from the mainland and other places be able to come into Hawaii and buy stuff," said Cassiday.

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