The Voice for Real Estate 79: Tax Reform, Net Neutrality, Loan Limits
The House-Senate conference committee made changes to tax reform that are better for homeowners although NAR remains concerned the bill on balance is not good for them because many middle-income homeowners will no longer itemize. Nevertheless, the conference bill is an improvement on MID, state and local tax deductions, and the capital gains exclusion on home sale proceeds, among other things.
- Tax reform
- Net neutrality
- Home sales
- FHA loan limits
Tax reform comes down to the wire
An FCC vote could change how open the internet will be
And sales pick up as the year winds down
These stories and more on The Voice for Real Estate
Hi, I’m Stephen Gasque with the National Association of Realtors
House and Senate lawmakers are close to voting on a tax reform bill and Realtors have helped make it less harmful to homeowners.
In one of the key improvements Realtors argued for, the bill keeps current law in place on the capital gains exclusion for home sales. The House and Senate bills had made that exclusion harder to take by requiring households to live in their house longer, but those harder rules were taken out.
In another improvement, the mortgage interest deduction is kept in place for second homes, as Realtors sought. The bill also includes a compromise on MID, by limiting the mortgage amount to $750,000. That’s up from just $500,000 in the House bill, although it’s still lower than the current $1 million limit.
And on state and local tax deductions, the bill makes a modest improvement by retaining deductions for both property taxes and income taxes, although the combined limit of the two remains just $10,000.
NAR hosted a live webcast on the bill and what Realtors were aiming for in the closing days of debate.
Lawmakers are hoping to have their bill on President Trump’s desk this year.
A major change in how the internet works is closer to reality. And the change could be bad news for real estate companies.
The Federal Communications Commission last week voted to end net neutrality, the set of rules in place since 2015 to maintain the internet as a free and neutral platform on which all websites are treated the same.
Without those rules, proponents of net neutrality say, internet service providers like Verizon, Comcast, and AT&T would be able to charge websites a fee to ensure fast delivery of their data. Some websites might be blocked altogether.
It’s not clear when, or even if, the ISPs will start charging fees now that the FCC change opens that door to them, but if they do, some real estate sites could be put at a competitive disadvantage. David Charron, CEO of MRIS, one of the largest multiple listing services in the country, shared his concerns in a live webcast NAR hosted on the topic last week.
NAR technology policy representative Melanie Wyne, who also participated in the webcast, said industry groups, including NAR, expect to file a lawsuit blocking the change. We’ll keep you updated as this matter moves forward,
In a positive sign, both existing-home sales and contract signings are up in NAR’s latest reports. In October, closings were up 2 percent and contract signings were up 3.5 percent. NAR Chief Economist Lawrence Yun says areas hit by hurricanes two months ago are recovering quickly. That’s helping to put sales on track to end the year higher than they were last year.
One wild card for home sales in 2018 is the impact of tax reform should it pass. We’ll be watching that carefully.
Your customers will be able to get larger federally backed loans under FHA in 2018. The agency is increasing its loan limits in the vast majority of counties—more than 3,000—and keeping them the same in just a couple of hundred counties. In expensive markets, the highest possible loan amount will rise from $636,150 to $679,650. That’s about a 7 percent increase. You can search “2018 FHA loan limits” on nar.realtor to access a chart that has the new loan limit for your area.
In another FHA update, the agency will no longer insure mortgage loans for homes that have a PACE loan on them. PACE stands for Property Assessed Clean Energy and it’s a type of loan that some homeowners take out to pay for installation of solar panels. Realtors have raised concerns about these loans because they often take a first-lien position, creating problems for backers of the primary mortgage when there’s a default. Not all homes that have solar panels used PACE loans, though. So, if you’re working with buyers or sellers of a solar powered home, you’ll want to see if those panels were financed with a PACE loan. If they were, your buyers will have to find financing other than FHA to buy the home.
And that’s out show for the week of December 18. You can get more on everything we talked about at The Voice for Real Estate page on nar.realtor. Thank you for joining us, and we hope you and your family have a wonderful holiday. Join us again next year, in early 2018, when we bring you the latest news on The Voice for Real Estate.