NAR said the bill is a direct threat to consumers, to homeowners and to the housing industry. Not only will millions of homeowners not benefit from the proposal, many will get a tax increase. Additionally, homeowners could lose substantial equity from the more than 10% drop in home values likely to result if the bill is enacted.
“Realtors® cannot support a bill that takes homeownership off the table for millions of middle-class families,” said NAR President Bill Brown, a second-generation Realtor® from Alamo, California. “Realtors® believe in the promise of lower tax rates, but this bill is nowhere near as good a deal as the one middle-class homeowners get under current law. Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford.”
NAHB CEO Jerry Howard echoed Brown’s concerns.
“The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations,” Howard told Fox Business. “The bill eviscerates existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives.”
Here’s what the Legislation Would Do:
Caps the mortgage interest deduction at $500K for new mortgages
The cap applies to new mortgage debt (but not refinancing) incurred after November 2, 2017.
Limit is not indexed to inflation causing its value to even further diminish over time.
Increases the standard deduction
Puts homeownership tax incentives beyond the reach of more than 90% of American families.
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 exemption, versus just 2 of previous 5 years today. This will create a hardship to homeowners who have to move inside that five-year window.
Exemption phases out for single filers with incomes over $250K ($500K for joint returns).
Eliminates the deduction for state and local income or sales taxes.
Eliminates the Mortgage Interest Deduction for second homes.
Eliminates the deduction for moving expenses.
Eliminates the deduction on interest on student loans.
Eliminates the deduction for medical expenses, even for the elderly.
All this from a bill that is supposed to improve the current system. Not only is this legislation a clear and present danger to American homeownership, it will cost our children and grandchildren $1.5 trillion in new federal debt.
Millions of middle class homeowners would see a tax hike under this plan.
This plan attacks homeownership and sticks future generations with a $1.5 trillion price tag.
America’s homeowners should not pay for corporate tax cuts.
Hard-working homeowners will lose money when their home values fall, while corporations will get a huge tax break.
Homeowners in all 50 states would be double-taxed on the money they pay for state/local taxes.
If you buy a home and then have to move within 5 years, you could be hit with a big tax bill under this plan.