Urge the Public to Contact Their Representatives
Tax reform discussions took a major step forward this week as leaders on the House Ways and Means Committee released its legislative proposal for an overhaul of the American tax code. The Long Island Board of REALTORS® Inc. (LIBOR) believes the bill represents a tax increase on middle-class homeowners.

“This legislation closely tracks with the House Republican Blueprint for tax reform, which threatens home values and takes money straight from the pockets of homeowners,” said LIBOR President David Legaz, Broker of Keller Williams Realty Landmark in Flushing, NY. “This is the most impactful federal issue affecting real estate that we have faced in a generation. Realtors® believe in the promise of lower tax rates, but this bill is nowhere near as good a deal as the one middle-class homeowners get under current law. Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford.”

Legaz said, “America’s homeownership rate still hovers around a 50-year low today. For many middle-class families, buying a home is the single largest investment they’ll ever make, and in fact, the average net worth of a homeowner is 45 times that of a renter. By eliminating or nullifying the incentive for homeownership, however, Realtors® are concerned that homeownership’s wealth-building potential could be pushed out of reach.”

Earlier this year, NAR released a full analysis of the House Republican blueprint for reform, finding that it would cause a 10 percent drop in home values and raise taxes on middle-class homeowners by an average of $815. In areas with higher property taxes or state income taxes including Long Island, New York City and Westchester, the tax hike and the drop in home values will likely be even greater.

Like the blueprint, the legislation released this week doubles the standard deduction, while repealing all itemized deductions, except for mortgage interest and charitable contributions. NAR noted that such a proposal would nullify the homeownership incentive for all but the top 5 percent of tax filers.

This bill, however, goes even further by capping the mortgage interest deduction at $500,000 for newly purchased homes. The legislation also eliminates state income taxes altogether, while installing a new cap on property taxes. At the same time, the proposal puts new restrictions on the capital gains exemption homeowners utilize today when they sell their home. The exemption is vital to allowing homeowners to use their equity to pay for retirement and other long-term needs.

LIBOR pleads with the public to contact their Member of the House of Representative and urge them to continue to resist this tax reform proposal. 

“The nation’s 1.3 million Realtors® cannot support a bill that takes homeownership off the table for millions of middle-class families,” states LIBOR’s Legislative Committee Chairperson Paul Llobell Jr, Associate Broker at Realty Connect USA in Great River, NY. “We know this legislation is just the beginning of a much longer discussion. Our members will continue to make their voices heard as we push towards tax reform that responsibly lowers the tax rate while protecting the dream of homeownership.”