As Congress considers ways to lower the corporate tax rate, proposals could leave real estate agents seeing red.
In fact, as proposed changes have been discussed, plans are stirring opposition from real estate agents, home builders, mortgage lenders and even charities, according to a CNBC report.
The National Association of Realtors recently issued an “August Recess Talking Points” circular, urging its members to remind their legislators that tax reform should be fair to homeowners in an effort to avoid another housing crash.
In its communications, NAR cited a report it commissioned from PwC that estimated home values could quickly dive more than 10 percent if the tax plan becomes law.
In an effort to streamline current tax codes, Republican leaders are considering eliminating nearly all tax write-offs including those for state and local taxes, then doubling the standard deduction. Doing this would scratch the incentive to itemize and would greatly reduce the number of taxpayers who elect to do so.
Doubling the standard deduction, will lead to fewer people buying homes to tap the mortgage deduction, according to NAR President William Brown.
“Current homeowners could very well see their home’s value plummet and their equity evaporate, while prospective homebuyers will see that dream pushed further out of reach.”
According to Robert Dietz, an economist with the National Association of Homebuilders, about 30 million taxpayers claim the mortgage interest deduction, with about $70 billion in total claims.
“Estimates suggest more than half of taxpayers would stop itemizing under the proposed plan. People in early years of a mortgage would suffer most, along with prospective home buyers.”
Jerry Howard, the head of the National Home Builders Association, said his group also is opposing the plan, noting the proposal will face stiff opposition from his group, which represents more than 130,000 builders nationwide.
According to Howard, his group has members that operate in every congressional district and employ more than 7 million people.