REALTOR® Fly-In Emphasizes Tax Reform Hit on Homeowners

Dozens of REALTORS® made a special trip to Washington this week to make a forceful case for protecting homeownership as lawmakers advance sweeping reforms to the tax code.

"Members of Congress are not able to fully absorb every issue they have to deal with, so the more they hear from us, the more they'll understand how the legislation they're voting on will affect homeowners and their communities," said Cynthia Carley of Lake Arrowhead Properties in Blue Jay, Calif.

Carley, a politically active REALTOR® who serves as the federal political coordinator for Rep. Paul Cook of California, was one of the REALTORS® participating in a special fly-in to meet with members of Congress. Her message to Cook: most middle-income homeowners, like she and her husband, face a tax hit if either of the reform bills under consideration in the House and the Senate pass without changes.

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"I calculated my own taxes under the provisions in the House bill and I'm going to pay $7,320 more in taxes than I did in 2016," she said.

Christian Schlueter of RE/MAX at Barnegat Bay in Toms River, N.J., and the federal political coordinator for Rep. Tom MacArthur of New Jersey, said he wants Congress to go back to the drawing board on tax reform. "In our district, there are a lot of homeowners that this would affect," he said.

Both the House and the Senate versions of tax reform would hurt homeowners who earn between $50,000 and $200,000 a year, NAR analyses show.

The House bill, which passed the tax-writing Ways and Means Committee recently and could go before the full House shortly, blurs the distinction between owning and renting by making it more advantageous for homeowners who itemize today to take the standard deduction instead. It does that by almost doubling the standard deduction while either eliminating or capping itemized deductions. The bill keeps the mortgage interest deduction but limits it to mortgages of $500,000, half of the limit today, and caps the property tax deduction at $10,000. The other state and local tax deduction is eliminated entirely, as are all other deductions except the one for charitable contributions. The bill also makes it harder to take the capital gains exclusion on the proceeds from the sale of a principal residence.

The Senate bill takes the same structure as the House bill but leaves MID at its current $1 million mortgage limit and eliminates the property tax deduction entirely, among other differences.

Although the higher standard deduction sounds like a win for many households, the increase is offset by the elimination of the personal and dependency exemptions. NAR calculates that many households will only see a small benefit from the higher deduction.

"If you're looking at it from a conceptual standpoint, sure, a tax cut is a great idea," said David Barber, GRI, ABR, of RE/MAX Unlimited, Inc., in Aurora, Colo., and the federal political coordinator for Rep. Mike Coffman of Colorado. "But how does the rubber meet the road on that? Some of the advantages they think they're providing aren't really advantages to middle-class homeowners."

"This is the biggest and scariest thing I've seen," said Brian Urdiales of Madison & Co., Properties in Greenwood Village, Colo., and the federal political coordinator for Sen. Cory Gardner of Colorado. "People don't realize that what happens here in Washington can affect their profession and affect their customers."

More on NAR's concerns with the House bill can be found here: 

Newsroom: House Tax Bill Delivers Tax Hike on Homeowners

Washington Report: House Proposal Harms Homeowners

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