The National Association of REALTORS® has launched a campaign to urge lawmakers to keep homeowners in mind as they proceed with comprehensive tax reform.
On September 27, a group of legislators and administration leaders known as the “Big 6” released an outline for comprehensive tax reform that would eliminate provisions such as the state and local tax deduction, while nearly doubling the standard deduction and eliminating personal and dependency exemptions.
REALTORS® believe this could put home values across the country at risk by eliminating the incentives for homeownership. As the framework currently stands, only the top 5 percent of Americans would have the benefit of claiming mortgage interest deduction.
“When combined with the elimination of the state and local tax deduction, these efforts represent a tax increase on millions of middle-class homeowners. That tax increase flies in the face of a reform effort ostensibly aimed at lowering the tax burden for Americans. At the same time, the lost incentive to purchase a home could cause home values to fall,” said NAR President William E. Brown, a second-generation REALTOR® from Alamo, California.
Here’s What You Can Tell Your Representatives & Senators
- Middle-income homeowners could be worse off under proposals that limit tax incentives for homeownership. According to a blueprint-like tax reform analysis from PricewaterhouseCoopers (PwC), home-owning families with incomes between $50K - $200K would face an average tax hike of $815 in the year after enactment while non-homeowners in the same income range would enjoy annual tax cuts of $516.
- The tax code historically has encouraged homeownership, but proposals to take that away could reverse this trend! Homeownership provides benefits to communities by increasing neighborhood stability and community involvement.
- Proposals that limit tax incentives may have effects that take years to rebound from. A reduction in home values for homeowners with relatively small amounts of equity would cause their mortgages to go under water. For many, this would lead to defaults, foreclosures, or short sales, creating another potential housing crash.
“Congress can still score a win for American families by promoting lower rates and comprehensive reform that doesn’t single out homeowners for a tax hike, while also preserving important investment incentives like 1031 like-kind exchanges. We look forward to continuing the discussion in the weeks and months ahead,” said William Brown, NAR President.
Be an informed Central MS REALTOR Member! Learn more about the
To learn more about NAR’s political advocacy campaign, speak with your local REALTOR® professional or visit https://www.nar.realtor/tax-reform.