Tax reform discussions took a step forward as leaders on the House Ways and Means Committee released its legislative proposal for an overhaul of the American tax code. The National Association of Realtors believes the bill represents a tax increase on middle-class homeowners.
“This legislation closely tracks with the House Republican Blueprint for tax reform, which threatens home values and takes money straight from the pockets of homeowners,” says William Brown, NAR immediate past president. “Realtors believe in the promise of lower tax rates, but this bill is nowhere near as good a deal as the one middle-class homeowners get under current law. Tax hikes and falling home prices are a one-two punch homeowners can’t afford.”
Brown said America’s homeownership rate still hovers around a 50-year low today. For many middle-class families, buying a home is the single largest investment they’ll make, and in fact, the average net worth of a homeowner is 45 times that of a renter. By eliminating or nullifying the incentive for homeownership, however, Realtors are concerned that homeownership’s wealth-building potential could be pushed out of reach.
Earlier this year, NAR released a full analysis of the House Republican blueprint for reform, finding that it would cause a 10 percent drop in home values and raise taxes on middle-class homeowners by an average of $815.
Like the blueprint, the newly released legislation doubles the standard deduction while repealing all itemized deductions except for mortgage interest and charitable contributions. NAR noted in its comments on the “Unified Framework” for reform that such a proposal would nullify the homeownership incentive for all but the top five percent of tax filers.
This bill, however, goes further by capping the mortgage interest deduction at $500,000 for newly purchased homes. The legislation also eliminates state income taxes while installing a new cap on property taxes. At the same time, the proposal puts new restrictions on the capital gains exemption homeowners utilize today when they sell their home. The exemption is vital to allowing homeowners to use their equity to pay for retirement and other long-term needs.
“The nation’s 1.3 million Realtors cannot support a bill that takes homeownership off the table for millions of middle-class families,” Brown says. “We know this legislation is just the beginning of a longer discussion. Our members will continue to make their voices heard as we push toward tax reform that responsibly lowers rates while protecting the dream of homeownership.”
Source: NAR