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Federal Tax Reform


attentionresized.jpgNAR Prepares For Fight on Mortgage Interest Deduction

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by Mary Schaefer, MORe Now Contributor
 

On June 27th, the Chairman of the U.S. Senate Finance Committee, Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) announced their plan for tax reform legislation in the United States Senate.   

You may hear more about this in the coming days as there will be a lot of media attention focused on the provisions that may become part of this legislation. Provisions like the mortgage interest deduction will be discussed. The National Association of REALTORS® in the Legislative Update: Tax Reform reminds all REALTORS® that they will be working hard to make sure that real estate tax provisions are maintained in any rewrite of the tax code. Passage of tax reform is far from certain. Expect to see lots of speculation in the media as to what might happen with this reform. NAR is not taking anything about tax reform for granted and will be prepared for the fight in Washington to maintain real estate tax provisions like the mortgage interest deduction. NAR already launched a Call To Action on July 10th inviting all members to contact their U.S. Senator to let them know that real estate tax provisions are critical to the economy and should stay high priority as they consider tax reform.

A letter sent to all Senators announced their intention to "mark up" (create legislation in the committee) a tax reform bill that will start with a "blank slate".  This mirrors the path outlined by Ways and Means Chairman Dave Camp (R-MI) in the House of Representatives. 

A "blank slate" means that as a starting point, all tax expenditures (including tax deductions such as the mortgage interest deduction, tax exemptions such as the capital gains exemption on the sale of a primary residence, and tax credits such as energy efficiency tax credits) will be removed from the tax code. Senators will have to request tax expenditures be added to the reform legislation. Using the "blank slate" approach allows the Senate Finance Committee to highlight just how much tax rates could be reduced by eliminating all the tax expenditures.  

Each Senator has been asked to submit, in writing, any tax expenditures they wish to see kept in the code. Senators have until July 26th to submit the requests to the Finance Committee. The drafting of the package will occur during the August congressional recess. The expected goal is for the Committee to present a completed draft for review and possible legislation action in September. 

There are a wide range of provisions in the tax code that affect residential, investment and commercial real estate. NAR will be taking the lead in ensuring that each of those tax provisions is defended. NAR will be working with U.S. Senators as well as other real estate associations to identify champions for each provision. 

As members of the National Association of REALTORS®, how can you assist in this process? Three Ways!

1. Stay Updated.  NAR will be advising members of the process underway and the status of REALTOR® Advocacy issues through its online newsletters, e-mail alerts and through realtor.org and realtoractioncenter.org. Stay updated on REALTOR® Party issues online at: http://www.realtor.org/political-advocacy/all-advocacy-issues and through www.realtoractioncenter.org. See how NAR is protecting your best interests and how you can get involved in advocacy efforts through realtoractioncenter.org. The Mainstreet Organization of REALTORS® will also be keeping a watchful eye on the progress of tax reform as reported by NAR and will work to keep you updated through its newsletters and through MORe Now. 

2. Be ready to ACT when needed!  Be sure to download the REALTOR® Action Center Mobile App in order that you can be ready to participate in important Calls to Action when asked by NAR. No forms to fill out it is short, fast and easy to download. The first Call to Action issued July 10th through the REALTOR® Action Center asks NAR members to contact their U.S. Senator to emphasize the need for any tax legislation to do no harm to the economy and housing. A sample template letter online at the REALTOR® Action Center is provided where members can easily customize the letter and asks U.S. Senators to maintain the following in any rewrite of the tax code:

The mortgage interest deduction should be preserved in its current form and the limits indexed for inflation.

The exclusion of capital gains on the sale of a principal residence should be preserved and the limits indexed for inflation.

The deduction for property taxes paid should be preserved. 

The temporary exclusion of income from discharge of mortgage debt (mortgage cancellation) should be made permanent.

The depreciation periods of commercial and residential buildings should be shortened to reflect the true useful lives of these assets.  The temporary provision allowing faster write-off  for leasehold improvements should be made permanent.

Provisions that allow for the deferral of gain on the like-kind exchange of real property should be maintained. NAR calls on its members frequently to act to support its governmental affairs initiatives. Simply by contacting your Member of Congress through an e-mail or a phone call, you can ensure that your business remains strong. Through the Mobile App, you will receive a notification alerting you whenever there is a new Call for Action. The  REALTOR Action Center mobile app is currently available only for the IPhone and Droid platforms. Check out more updates and how you can participate in calls to action at  http://www.realtoractioncenter.org/. Now more than ever, it is critical for REALTORS® across America to come together and speak with one voice.  

3. Learn How RPAC works for you. RPAC allows REALTORS® to make sure their concerns about issues are heard and understood. The REALTOR® Party supports issues that are important to your business as a REALTOR®. RPAC is an investment in your business. If REALTORS® do not speak out, get involved and help shape the discussion on tax reform and other issues, someone else will. RPAC uses its financial resources to support candidates for Congress who both understand and support REALTOR® issues. RPAC is the #1 trade political action committee in the nation.  Learn how you can contribute today at www.realtoractioncenter.org. Act and Invest today!
 Be ready to support the REALTOR® initiatives.  NAR is committed to protecting the current federal tax provisions that affect real estate and will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest. 

 

 Federal Tax Reform

 
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