Sacramento's real estate market continues to heat up, as more people choose the city as their permanent residence.

However, homeowners in the Sacramento metro will soon be seeing their tax benefits cut under the new Trump tax code. In fact, Sacramento will be one of the hardest hit metros in the country with a large share of homeowners experiencing tax deductions.

The Tax and Jobs Act was signed into law in December 2017, making it the first major tax overhaul since the mid-1980's. The legislation will make changes to tax benefits that have been in place for homeowners for years. The bill will reduce the cap on the mortgage interest deduction from $1 million to $750,000, cap state and local taxes (which includes property taxes) at $10,000 and double standard deductions so that fewer homeowners itemize their tax filings.

According to a new report by Apartment List's real estate research and analysis blog Rentonomics, homeowners in the coastal markets are the most impacted by the tax bill, due to a combination of high real estate value and high local taxes. The top five hardest hit metros in the country are all in California: San Jose, San Francisco, Los Angeles, Oxnard, and San Diego.

Homeowners in the Sacramento area won't see as high tax deduction losses as their Bay Area neighbors, but will still have to account for significant losses.

Rentonomics researchers analyzed the impacts to owners with home values in the 25th, 50th and 75th percentiles — or below, at and above the median — of their local markets. Analysts found that in all four counties in the Sacramento region, even owners of the least expensive homes will lose deductions.

Anywhere between 75 and 100 percent of homeowners in Placer, El Dorado and Yolo counties will see housing tax deduction losses, according to the report. In Sacramento County, 50 to 75 percent of homeowners will see losses.

Owners with homes valued at the median in Placer County are expected to see first-year housing tax deductions losses of $1,570. El Dorado County could see losses of $1,554 for median valued homes, while in Yolo County, it's potentially $1,227 of tax deduction losses in the first year.

Sacramento County owners with median valued homes should expect $487 in first-year housing tax deduction losses.

Interestingly, the majority of counties of all Midwest states will barely feel an impact from the tax reform since home values in this middle region of the country tend to be much lower than the home prices on either coast. Most homeowners were taking the standard deduction before the changes and will continue to do so, according to the report.

Only homeowners with the most expensive homes will experience housing tax deduction losses and even then, the losses are significantly lower than those seen in California. As an average, California will see a median housing deduction loss of $3,200 — the highest in the country — while other states like Kansas, Nebraska and Oklahoma are estimated to have an average of $0.

The Rentonomics report points out the changes disproportionately impact homeowners in left-leaning states. The 15 states where the median homeowner would see a reduction in housing tax benefits of more than $100 a year are states where Hillary Clinton won the 2016 election.

Over a 30-year mortgage, loss of housing tax deductions could total more than $100,000 for owners in median-priced homes in the Bay Area. However, the report notes, markets with high home prices can still choose to respond to the loss of tax benefits and reduce the impact.

Additionally, the tax reform won't completely worsen conditions for homeowners in the near-term because of the higher standard deduction, according to the report. Some of the households that lose tax benefits will still see a reduction in their overall tax bill.

The main blow to the housing market from the tax bill is the loss of incentives for homeownership and a push into an already-strained rental market in the most impacted areas.