Voice for Real Estate 62: Tax Reform, RESPA Fines, Prices, Pets

A tax reform plan by the House Ways & Means Committee would eliminate the property tax deduction, double the standard deduction, and lower tax rates. Also being considered is repeal of 1031 tax-deferred exchanges. REALTORS® expressed concerns over the changes at a meeting two weeks ago with leaders of the Ways & Means Committee. The video also looks at the penalties imposed on two real estate brokerages for marketing service agreements they entered into with a lender. The federal government says the agreements were unlawful referral-fee arrangements. Other video stories: the latest home-price trends, the importance of pets in household housing decisions, and recognition NAR has received for its energy-efficient Washington building.


Featured segments

  • Tax reform
  • RESPA fines
  • Home prices
  • Pets
  • NAR green building

 

Transcript

A tax blueprint in Congress could hurt real estate

The federal government fines real estate brokers for their marketing service agreements

And home prices across the country reach a milestone

These stories and more on The Voice for Real Estate

Hi, I’m Stephen Gasque with the National Association of Realtors.

Hundreds of Realtors met with powerful members of Congress last week in Washington at NAR’s 2017 federal policy conference.

Kevin Brady of Texas, the chairman of the House Ways & Means Committee, walked Realtors through a blueprint he and other lawmakers are working on that would make taxes so simple, you’ll be able to file your return on a post card.

The blueprint would condense today’s seven tax brackets into three, with rates of 33, 25, and 12 percent. And it would increase the standard deduction to $24,000, almost twice what it is today.

BUT – those changes could have a negative impact on home sales.  That’s because the blueprint would also eliminate most itemized deductions, including the deduction for state and local real estate taxes.

And while the blueprint leaves the mortgage interest deduction in place, itemization would no longer make financial sense for most households.

Realtors at the conference expressed concerns, saying the loss of a federal incentive for homeownership will hurt communities across the country. Brady said he took those concerns seriously.

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Realtors also sounded the alarm about the blueprint’s changes for commercial real estate   most importantly, a proposal to eliminate 1031 tax-deferred exchanges.  

The exchanges are a driving force behind many commercial transactions every year, and they’re particularly important to small, individual investors.

Brady said lawmakers are talking about eliminating the exchanges but also adding a provision that would allow owners to deduct 100 percent of the cost of new business assets in the first year of ownership. Those business assets would include buildings but not land.

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Brady and other lawmakers at the conference said they would be reaching out to Realtors in the months ahead to make sure reforms improve the tax code without hurting real estate.

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The federal government came down hard last month on two real estate brokers. The Consumer Financial Protection Bureau says marketing service agreements each broker made with a lender amounted to referral-fee arrangements, which violate anti-kickback laws under the Real Estate Settlement Procedures Act. Here’s NAR’s Christie DeSanctis with more.

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Marketing service agreements are not illegal under RESPA, but the fees lenders pay real estate professionals must be for actual services rendered and can’t be tied to the number of referrals to the lender. You can learn more by searching “RESPA FAQ” at nar.realtor.

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We have good news for sellers and maybe challenging news for buyers, because home price keep going up and up. Last year almost 90 percent of the country’s 150 largest metro areas saw prices go up, many by double digits, and in more than half of the markets, prices are now at or above their previous all-time high. Here’s NAR’s director of housing research, Danielle Hale, with more.

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San Jose is the country’s most expensive market, with a median home price of just over $1 million. That’s followed by San Francisco, Santa Ana, Calif., Honolulu, and San Diego.

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Few things are more important in real estate than understanding your clients’ needs. And for clients who have them, it doesn’t hurt to be sensitive to their pets’ needs as well. As a report by NAR makes clear, pets are major considerations for households when they buy and sell a home. In fact, 81 percent of households say their pets play a leading role in their housing decisions. Here’s Jessica Lautz of NAR Research with more.

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You can see at a glance all findings on the importance of pets by search “animal infographic” at nar.realtor.

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Did you know NAR’s Washington office is a green building? In 2004, when NAR completed construction on the building, just three blocks from the U.S. Capitol, the United States Green Building Council awarded the building with a Silver LEED certification for energy efficiency and sustainability. Well, last week the Council came to the building to give it a new, Platinum certification. That’s the highest energy efficiency recognition any building can get.

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These measures are expected to lower operating costs and make the building more efficient and attractive to tenants.

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And that’s our show for the week of February 13. You can get more on everything we talked about today at The Voice for Real Estate page on nar.realtor. Thank you for joining us and be sure to join us again as we bring you the latest news on The Voice for Real Estate.

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