Credit: AP/Michael Conroy
Realtors are worried that the House Republican tax plan will gut incentives to buy homes and drive down home values.
In a letter last week to Congressional leaders, the National Association of Realtors (NAR) said the proposed Tax Reform Blueprint spearheaded by House Speaker Paul Ryan could result in “potentially devastating problems” to the housing market.
A 35-page outline of the plan was released over the summer. The plan calls for standard federal deduction to be nearly doubled. Most itemized deductions, however, would be eliminated, including the deductions on state and local taxes paid.
The plan would preserve the mortgage-interest deduction, but assign the House Ways and Means committee to evaluate its provisions to make the incentive “more effective and efficient” in helping people achieve homeownership. The housing lobby is fearful that the deduction will be severely capped beyond the current limit on $1 million of mortgage debt and $100,000 on home equity debt.
In the letter, NAR said the totality of the Republican plan “would have the unintended consequences of nullifying the long-standing tax incentives of owning a home.”
NAR said eliminating tax incentives on property could have […]
Interesting article, but I think it misses the point. The fact that house prices have risen so high that Americans need tax deductions to afford paying interest, means there’s a bigger problem here. My fiancé and I make a good living, but have chosen to not buy a home until we pay off our student loan dept, and have time to save enough for a good down payment. In our minds, that is the point when we’ll be able to afford to buy. I understand that housing is a complicated issue, but as long as housing prices continue to rise unsustainably, people like my fiancé and I will suffer. For example, rent in our neigborhood has increased 25% over the past two years due to increasing housing prices, which makes it hard to save up for that down payment.
Personally, I don’t think that encouraging people to buy homes they can’t afford aligns well with a wellness based society, and it in fact makes it harder for responsible people like my fiancé and me. It all seems like a scam to me: the fed loans money to mortgage companies for little interest, then they loan it to home buyers at interest based on risk, and because the risk is so high the government has to turn around and subsidize the homeowner… it seems like the only ones who win here are the mortgage companies. I think that whether you argue for or against tax breaks on home loan interest, then you’re missing the point and really just trying to make people take a side that doesn’t solve the root problems, and instead only helps get them to vote for one side or the other.
If you have time, please comment, as this is a new subject for me that I may not be completely informed on.
excellent comment. most tax policy experts agree that the housing subsidy via the interest deduction is bad policy but it has become ingrained as an entitlement. the subsidy is best eliminated by a phasing out so as to not shock the budgets of those who rely on it.
all changes in tax policy impact someone.
good luck with your housing, i think the future will see an increase in multi-family dwellings.