December 2017 // Real Estate & Home Builders Guide // 19W
Is tax reform going to kill the housing market?
By Ilyce Glink
and Samuel J. Tamkin
Tribune Content Agency
I
f you listen to the National
Association of Realtors and
the National Association of
Home Builders, the answer is a
resounding yes. On a call with
journalists earlier in the week,
NAR Senior Policy Represen-
tative Evan Liddiard said if tax
reform passes in its current form,
housing prices could fall between
10 to 30 percent.
“This is an outright assault on
housing,” Liddiard said.
As details of the House and
Senate versions of tax reform
became clearer, and there are
slight variations between the
two, there is plenty at stake for
homeowners, including:
• Eliminating or cutting in half
the mortgage interest deduction,
from $1 million to $500,000.
• Limiting the deductibility of
property taxes to the first $10,000
paid.
• Eliminating the deduction for
second or vacation homes.
• Eliminating the deductibility
for home equity loans.
• Eliminating the deductibility
of state and local taxes (now
called SALT), which hits high
cost/high tax states (which mostly
are “blue”) the hardest.
• Dramatic change in the
exclusion of profits on sale:
Homeowners will have to live in
their home as a primary residence
for five out of the last eight years
in order to keep up to $250,000
in profits tax free (up to $500,000
if you’re married filing jointly)
instead of two of the last five
years.
• Repeal of deductibility of
moving expenses.
Liddiard estimated that just
5 percent of taxpayers — “the
wealthiest 5 percent” — will be
able to deduct mortgage interest
paid.
“By doubling the standard
deduction and eliminating all
itemized deductions, only 5 to 6
percent of individuals will be able
to itemize on their tax returns,”
Liddiard explained. Tax reform
“makes it so the tax incentive
of a property tax deduction and
mortgage interest deduction
would be meaningless. Owning
and renting would be equivalent
from a tax perspective. And,
since tax incentives are built into
today’s prices, they would drop
by more than 10 percent in the
short run” and up to 30 percent in
some high cost areas.
And, that might be fine, except
that the so-called doubling of the
standard deduction doesn’t work
as advertised. “Many people
aren’t aware of it, but both of
these bills repeal the personal
exemptions you’re able to take,”
Liddiard pointed out.
The repeal of personal
exemptions is mitigated to a small
degree by an increase in child
credit. “But many people can’t
take advantage of that because
older children over the age of 16
in the House bill and 17 in Senate
bill don’t qualify. And if you’re
in the 25 percent bracket, there’s
no benefit from the higher tax
credit because you lose more in
the exemptions. Larger families
will lose even more because they
have more dependents. So, they’re
going to see tax increases,” he
said.
Both Liddiard and NAR
President Elizabeth Mendenhall
said that both the House and
Senate bills discriminate against
millions of homeowners in the
middle income area. “They will
get a tax increase,” Mendenhall
said.
In addition, Liddiard said
repealing the deduction of student
loan interest (and taxing an
unpaid benefit graduate students
receive in the form of tuition) will
make it far harder for millennials
— who are just starting to buy
their first home — to save for
down payments or qualify for
mortgages.
Finally, Liddiard said lowering
the corporate tax rate will make
it less appealing for investors to
take advantage of the low income
housing tax incentives, leaving the
“low income housing community
short of what they need to keep up
with the units” required.
NAR and NAHB representa-
tives have been camping out on
the Hill, trying to meet with as
many members of Congress as
possible. Considering that these
two associations have, for years,
been considered the toughest
lobbying forces in Washington,
D.C., passing tax reform would be
a resounding defeat.
“This is about a very
fundamental question: Do we
want to be a nation of renters or a
country of homeowners?” asked
Mendenhall.
The House of Representatives
passed its version of the tax
reform bill on Nov. 16, along
strict party lines.
Nancy Walchli
Shirley Parsons
Sherie Britt
Bennett Christianson
Broker, GRI
541-571-1723
nancy@
christiansonrealestate.com
Principal Broker
GRI, ABR
541-561-7434
shirley@
christiansonrealestate.com
Broker
541-720-1192
sherie@
christiansonrealestate.com
Principal Broker/Owner,
CNE, SFR
971-237-1403
bennett@
christiansonrealestate.com
Stephanie Hughes
Jacque Noland
Melissa Mercer
Jessica Jacobson
Wayne Christianson
Broker
541-720-9769
stephanie@
christiansonrealestate.com
Broker
541-701-7098
jnoland@
christiansonrealestate.com
Broker
541-701-4408
melissa@
christiansonrealestate.com
Broker
509-948-7714
jjacobson@
christiansonrealestate.com
Principal Broker/Owner,
CNE
541-992-0288
wayne@
christiansonrealestate.com
541.289.4663
702 E. Main
Hermiston, OR
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