President Donald Trump has put a new housing tax idea on the table that, if it ever advances, could add a powerful lever to financial planning for many American homeowners.
Speaking Wednesday at the World Economic Forum in Davos, Switzerland, Trump suggested extending depreciation rules to owner-occupied homes, a benefit now reserved mainly for business and rental property. Depreciation is an annual income tax deduction that allows property owners to recover certain costs over a prescribed period.
“The crazy thing is a person can’t get depreciation on a house, but when a corporation buys it, they get depreciation,” Trump said. “Okay, here’s something we’re gonna have to think about.”
Under current law, the tax break applies to business property or income-producing rental real estate, but not to a primary residence, except for portions used for business. The deduction is based on the property’s tax basis — purchase price plus qualifying improvements — and when it was placed in service. The method and recovery period determine how much can be written off each year. When the property is later sold at a profit, the IRS can reclaim part of the benefit through depreciation recapture.
Trump offered no details on how a homeowner version might work, and it is unclear whether congressional leaders have any appetite to pursue such a change amid competing tax and budget priorities. Still, the mere suggestion is likely to catch the attention of financial advisors who build long-term plans around housing and tax efficiency.
If a personal residence depreciation deduction were enacted, it could lower the after-tax cost of owning a home and meaningfully change the buy-versus-rent analysis, especially for higher-income clients. The prospect of a recurring deduction tied to the home’s cost basis would add a new dimension to housing decisions already shaped by mortgage interest, property taxes and the existing exclusion for gains on the sale of a primary residence.
Any future proposal would also raise technical questions critical for planning: how such a deduction would interact with the home sale gain exclusion, whether depreciation on a principal residence would be subject to recapture, and how improvements would be tracked for basis purposes. Those design choices would determine whether the break is a lasting wealth builder or primarily a timing benefit.
Trump’s remarks come alongside other housing-related efforts, including an executive order signed Tuesday aimed at banning large institutional investors from purchasing single-family homes, as policymakers focus on the rising cost of living and housing affordability.
For now, advisors cannot plan on a deduction that does not exist in law but, if Trump is to be believed, tax treatment of housing is back in the policy conversation, and any move toward homeowner depreciation would quickly become central to tax planning and retirement strategies for clients across the income spectrum.
Sam Su worked at UBS Financial Services in San Francisco from 2008 to 2023 before jumping to Morgan Stanley.
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