Real Deal: Realtors share concern about Trump’s tax reform proposal
Major reforms are needed to lower tax rates and simplify the tax code, but that shouldn’t come at the expense of current and prospective homeowners, according to realtors. In a statement released soon after President Trump’s tax proposal was announced late last month, the National Association of Realtors said while the president’s tax proposal is well-intentioned, “it is a non-starter for homeowners and real estate professionals who see the benefits of housing and real estate investment at work every day.”
“The mortgage interest deduction and the state and local tax deduction make home ownership more affordable, while 1031 like-kind exchanges help investors keep inventory on the market and money flowing to local communities,” said William Brown, president of the national realtor group. “Those tax incentives are at risk in the tax plan released today. Current homeowners could very well see their home’s value plummet and their equity evaporate if tax reform nullifies or eliminates the tax incentives they depend upon, while prospective home-buyers will see that dream pushed further out of reach.”
NAR indicates real estate now accounts for over 19 percent of America’s gross domestic product, or more than $3 trillion in investment. “Homeowners put their hard-earned money on the line to make an investment in themselves and their communities, and it’s on them to protect that investment. Common sense says owning a home isn’t the same as renting one, and American’s tax code shouldn’t treat those activities the same either,” said Brown.
Brown said for roughly 75 million homeowners across the country, a home represents their ambitions, their nest egg, and the place where memories are made with family and friends. Targeted tax incentives are in place to help people get there.
“Although the proposal keeps the mortgage interest deduction intact, raising the standard deduction and eliminating the state and local tax deductions cancel out the tax benefits of owning a home,” said Denise Welsh, president of the Silicon Valley Association of Realtors. “Eliminating incentives for home ownership would lower the demand for housing and result in lower home values. It would have the largest impact on first-time homebuyers, especially young couples.”
Welsh added home ownership isn’t just financially rewarding; it also creates stability and has many social benefits. “Purchasing a home is an investment in the community. People have greater stake in what happens in their local area when they own rather than rent,” said Welsh.
Studies have shown children of homeowners are stronger academically. “There is a certain comfort and security a child feels knowing they have a stable place to call home. Home ownership also helps lower community crime rates. Homeowners are much more likely to participate in local crime prevention programs and be involved in local civic affairs,” said Welsh.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at silvar.org. Send questions on any topic to firstname.lastname@example.org.