Property Tax Deduction Receives New Scrutiny in Tax Reform Debate

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Homeowners have been able to offset local property taxes against their federal income tax since the United States adopted an income tax in 1913–but now 100 years later this perk may come to an end, depending how tax reform unfolds in Congress. Lawmakers pushing for a comprehensive overhaul of the tax code say they will take a close look at deductions related to state and local governments, including local property taxes and the tax benefits associated with municipal bonds. The property tax deduction in particular is likely to spark debate, say tax professionals and financial industry representatives, because of the possible threat on the slowly recovering real estate market.