NAR President Gary Thomas testified at a hearing of the House Ways and Means Committee entitled “Tax Reform and Residential Real Estate.”
The purpose of the hearing was to consider how federal tax provisions, such as the mortgage interest deduction (MID) and the deduction for real property taxes, affect the housing sector and homeownership.
Gary Thomas’ oral testimony drove home three major points:
- Realtors support maintaining the current law tax incentives for homeownership with no changes;
- The major beneficiaries of the MID and other tax incentives are not the wealthy but younger, middle-class families with children who are already carrying more than their fair share of the income tax burden; and
- Proposed changes to the current law, such as halving the $1 million MID cap, converting the deduction to a 12% or 15% credit, or removing its applicability to second homes, would each have negative effects on middle-class families and on the nascent housing recovery. Congress should first, “Do No Harm,” he concluded.
Besides the NAR, invited witnesses to the hearing included the National Association of Home Builders (NAHB), the National Multi Housing Council, and a panel of economists who study housing policy.
Members of the Ways and Means Committee asked many questions of the witnesses, but it was clear that a majority of those present seem concerned with the idea of repeal or other wholesale changes to the MID. Other Members, however, stressed the importance of a simpler tax code and a lower tax rate, which many believe only can be achieved by repealing large deductions such as those related to residential real estate.