Make Your Voice Heard about Tax Reform Legislation
The National Association of REALTORS® opposes the tax reform legislation as proposed earlier this month in the U.S. House of Representatives. This bill is a direct threat to consumers, to homeowners and to REALTOR® businesses. Not only will millions of homeowners not benefit from the proposal, many will see a tax increase. Additionally, according to a PwC study, homeowners could lose substantial equity from the more than 10 percent drop in home values likely to result if the bill is enacted.
Severely Limits the Mortgage Interest Deduction
Mortgage interest incurred after November 2, 2017, would not be deductible on loans over $500,000. This cap is not indexed to inflation causing its value to even further diminish over time. Although the vast majority of mortgages in San Antonio are under $500,000, this is not true around the country where $500,000 is closer to the median home price. The mortgage interest deduction for second homes is eliminated entirely.
Caps the Property Tax Deduction
Texas has one of the most burdensome property taxes in the country. The property tax deduction would be capped at $10,000 under the proposal, leaving a large number of Texas homeowners unable to deduct a portion of their property tax bills, leading to double taxation.
Increases the Standard Deduction
By increasing the standard deduction, and at the same time limiting mortgage interest and property tax deductions, the tax bill puts homeownership tax incentives beyond the reach of more than 90 percent of American families who will choose the standard deduction over itemizing.
Limits the Exemption on Capital Gains Tax from the Sale of a Primary Residence
New rules would require homeowners to live in their home for 5 of 8 years before a sale to qualify for the capital gains exemption, versus just 2 of previous 5 years today. This will create a hardship for homeowners who have to move inside that five-year window. Considering most military jobs rotate every four years, thousands of military families in San Antonio could find themselves unable to buy or sell their homes without subjecting themselves to heavy taxation.
Eliminates the Deduction for State and Local Income or Sales Taxes
Homeowners in all fifty states would now be double taxed on the money they pay to local and state government.
Eliminates the Deduction on Interest on Student Loans
The National Association of REALTORS® buyer survey frequently cites student loan debt as one of the largest impediments to homeownership. Eliminating the student loan interest deduction will only compound that challenge.
Today, homeowners already pay 83 percent of all federal income taxes. They should not have to pay more taxes so corporations can pay less. REALTORS® know that homeownership is the gateway to wealth building for millions of middle-class Americans. History shows that renters generally do not accumulate wealth over the long haul. In fact, the latest Federal Reserve data shows that since 2010, the typical wealth of a renting household has fallen, from $5,900 to $5,100, while home-owning households have seen their wealth jump from $192,800 to $231,400.
It is vital that Congress hears from REALTORS® that homeownership matters and the tax plan does not reflect that idea. Text ‘txrealtors’ to 30644 and let your voice be heard.