This Tax Reform Is No Tax Decrease, Especially If You Own a Home !

Real Estate Agent with RLAH Real Estate AB95346

At this week's office meeting, a colleague reported on what happened at the recent NAR meeting with respect to tax reform.  And if I had expected a lower tax bill, it doesn't look too promising for me or most other hone owners.

Originally I thougth, great, they are keeping the mortgage tax deduction.  But it's more complicated.

Right now, the Republicans in Congress are working feverishly to get a tax reform bill to President Trump. They want to be able to go home to their districts for Thanksgiving with news that they've accomplished something.  

But wait!  What are they trying to accomplish?

People who don't own a home and who file a short form tax return may indeed get a tax break. But sadly, out clients - anyone who owns a homes -  probably will not.  

Here are some of the concerns listed in the National Association of Realtors talking points:

  • The bill does keep the mortgage interest deduction - sort of.  The amount of mortgage was lowered, however to $500,000, and it only applies to primary residences.  No second homes.  
  • The standard deduction will be increased for each wage earner, which will make it more beneficial to forget the mortgage deduction and standard deduction.
  • Capital gains tax deduction ($250,000 for single filers and $500,000 for couples) are being eliminated for people who have not resided in their home for at least 5 out of the last 8 years.  This will especially impact military families who move frequently.
  • The capital gains deduction in being phased out for single filers who earn more than $250,000 per year and for couples earning more than $500,000.  So people like me who bought in 1983 for $126,000 would have no incentive to sell a home now worth over a million dollars.  That'll help increase inventory - not!
  • Interest on student loans would no longer be deductible.
  • State and local taxes, be they sales taxes or real property taxes, cannot be deducted on your federal return.
  • They are cutting out the deduction for moving expenses should you be transferred from one city to another.
  • No more medical expense deduction - like insurance costs for self-employed people in addition to large medical expenses not covered by insurance.
  • No more casualty loss deduction, so if you get hit by a hurricane, tornado or forest fire, any losses over and above what your insurance covers will not be deductible.

NAR and the National Association of Home Builders have teamed up to push back on these changes, which will be felt keenly by many of our clients.  But where is the National Association of Homeowners in this battle? 

Oh, wait.  there is no National Association of Homeowners!

Bottom line, I think that we should not depend entirely on NAR to educate the public.  We need to do that.  Many brokerages in this area are sending emails and mailings to clients asking them to contact their congressional representative - except here in Washington, DC our citizens don't have voting representation on Capitol Hill!  

You can answer NAR's Call to Action,  Please, please send your congressperson and Senators letters or emails (your own words are better than the canned version NAR provides, but use it as guidance).  If they want tax reform, the idea is to do it competently, not just quickly!  

And even more important, you can share this information with current and past clients so they can take action, too. 

This is not just an important NAR issue, but also a crucial consumer issue!


Re-Blogged 1 time:

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  1. Carol Williams 12/18/2017 02:11 PM
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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Patricia, we were urged to send the call to action to our clients when the last one came out.  This has been on the agenda for years, but sure looks like we may lose this benefit this year.

Nov 11, 2017 06:31 AM #13
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Joan, it's really, really important to get people to c all, email, text or whatever to their contressment.  And it's not just about the mortgage interest deduction!

Nov 11, 2017 03:24 PM #14
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Pat

So nice to talk with you the other day even though it was about some of the issues we may face with the proposed tax reform bill, as you have outlined here. I suspect more people than not are unaware of the details of these proposals and the potential impact. While I don't think most buyers buy because of the mortgage interest deduction, this change will certainly impact many, especially in more expensive parts of the country.


Nov 11, 2017 06:09 PM #15
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

In all fairness how does this differ from the affordable health care bill that no one read and they voted it in? Welcome to US Politics Pat, I thought you would know better living in the city where all the bad decisions are made by both sides of the isle... In all fairness you should be posting about Veterans Day and thank the veterans that you can express your view...Just sayin, Endre

Nov 11, 2017 08:58 PM #16
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Jeff, here in DC, most of us are aware of the details.  And it's about a lot more than the mortgage deduction, which may come through this in tact.  It's also about the more subtle changes - especially with capital gains - that will start to add up.

Nov 12, 2017 02:12 PM #17
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Endre, I've heard that Senator Al Franken is probably the only one who reads most of the the important bills.  So you are right.  Most of the members of Congress in the past have relied heavily on staff.  Today, few have staff who bother to read the bills for them - unless they happen to serve on the committee dealing with whatever the issue might be. 

As for Veterans Day, I wrote this post on November 9th, which I don't think was Veterans Day.  You might check your calandar.  I could be wrong.  I celebrated it yesterday with some favorite veteran friends.

And, like you, I care deeply nabout how this bill impacts the members of our armed forces.  In it's current state, homeowers in the military will be among the most heavily impacted with higher tax bills than they have now, at least with the House version, and  I would urge you to familiarize yourself with the proposal and call  your congressional representatives to express your concern about the impact on these people serving our country and their families.

Nov 12, 2017 02:23 PM #18
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hi Pat - both Senate and House version of a "tax plan" will hurt middle-class people in my area, where a simple 2-bedroom condo sells for around $930,000 and a modest 3BR/2BA house around 1.5M. We're already started to see buyers back off until they know all the facts so they can plan intelligently.

Nov 27, 2017 06:11 PM #19
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

I feel your argument is strong and well thought-out Patricia Kennedy. I'm always glad to see you're smiling from time to time on ActiveRain...

Dec 08, 2017 09:56 PM #20
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

You are close, can feel the power of the elected to represent our interests best Patricia Kennedy ! Thanks for spelling it out as it stands today.

Dec 11, 2017 03:36 AM #21
Walt Fish
Bay Area Home Inspection, LLC - Marquette, MI
Upper Michigan's Most Experienced Home Inspector

The only one that would affect me would be the elimination for the property tax deduction. That would not help. Currently, you need at least 10% of your net earnings in medical expenses (I think) before they can be deducted. I never have reached that. We don't have a single home in the UP that is worth over 500K (with a couple notable exceptions) so that wouldn't be an issue here. I do get the point of the article though. Why lower the rates a bit and then take away most of the deductions? I think they are trying to simplify it and get rid of loop holes. The problem is that they are not addressing gov spending. to lower rates, you would have to lower spending, or simply shuffle things around, and not really lowering rates in a meaningful way.  

Dec 11, 2017 04:53 AM #22
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

I wish there would be a reliable tax simulator so we could really gauge the true impact without special interest filters. 

Dec 11, 2017 03:45 PM #23
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

What else is new?  The rich get richer.... and the poor get poorer, and so it keeps on going.

Dec 17, 2017 05:18 PM #24
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Excellent summation, Patricia.  I'll reblog for whatever good it does. 

Dec 18, 2017 02:10 PM #25
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

We will see when the revision or the revolt takes place....with 80 per cent of the American public not in favor or this legislation !

Dec 20, 2017 03:16 AM #26
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Pat

Time will tell about the realities of the new tax bill, won't it?!


Dec 24, 2017 12:29 PM #27
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

I didn't read that the mortgage interest deduction applies only to primary residences.   I wonder what will be the case for second homes?  Investment homes?  Ugh!   

Dec 25, 2017 07:01 PM #28
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

It's all so confusing to me and I tend not to trust a word of what the politicians say. Us regular folks are usually the ones to pay the price whenever they make changes.

Dec 26, 2017 11:02 AM #29
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Turns out the sky isn't falling. NAR is attempting to scare up support for the mortgage interest deduction because it justifies their existence and brings in more PAC money.

The bill passed and we are already seeing that it will result in savings for the majority of tax payers. I personally just got a call from my CPA yesterday and we will be getting a refund for the first time since I bought my business eight years ago. And it's not a small refund, either! We're projecting to get back nearly 25% of what we paid!

Dec 28, 2017 05:34 AM #30
Corey Martin
Martin Presence Group - Ruston, LA
Real Estate and Management Solutions

Well, we will just have to see how this all pans out. There are no telling what the second and third order effects will be. Thanks for sharing. 

Jan 02, 2018 06:00 PM #31
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

How can one pathological liar in WH change people around is astonishing, but not really news for me. It is beginning to resemble Russia more and more ...


Jan 29, 2018 10:32 PM #32
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Patricia Kennedy

Home in the Capital
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