Tax reform is on its way...FAST. Jamie Gregory explains what’s going on in Washington D.C. and how it negatively affects homeowners by taxing away tax incentives. Tune in to learn the benefits of homeownership, who is affected (hint: YOU), and what you can do to make your voice heard before it’s too late.
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Time Stamped Show Notes:
- 00:50 – Jamie is with the National Association of Realtors (NAR) in Washington D.C.
- 01:45 – What is going in Washington D.C. and the world of lobbying?
- 01:55 – The passage of the tax bill out of the Ways and Means Committee
- 02:02 – The release of the senate bill with provisions that affect housing, home ownership, and real estate
- 02:20 – On the house side, chairman of the committee Kevin Brady says mortgage interest deduction has been retained, when in actuality its effectiveness is nullified
- 2:38 – Bill will double standard deduction and eliminate state and local tax deduction, meaning only 5% of tax filers will be itemizing
- 3:00 – Incentive provided by mortgage infrastructure will be taken away
- 03:13 – Homebuyers receive tax refund, see financial benefit, and put money back into the local economy
- 03:45 – Renters are great but homeowners tend to invest in and care about the improvement of their neighborhood more
- 04:20 – Sociologists have studied how home ownership creates more stable, active, voting communities
- 04:30 – We don’t want to take that away; for 100 years, there has been an incentive in the tax code for homeowners
- 04:43 – What is being proposed in Washington will take that away and make renting and owning no different
- 05:08 – Other things in the tax reform: Punishment for buying a home and watching equity values increased over time
- 05:25 – State and local deductions – house bill retains reduction for state and local property tax, but 70% of deduction is for income tax, which has been removed
- 05:46 – In senate bill they have eliminated state and local deductions
- 05:58 – Combined with mortgage interest deduction, the state and local deduction provide total incentive to buy a home
- 06:08 – In 1997 congress passed the Homeowner’s Capital Gains Exemption: If you sell your house after 2 years you can keep up to $250,000 tax free as a single filer and up to $500,000 if married
- 06:30 – The house is proposing to change the rules on that to more than double the time requirement
- 06:50 – The provision was put in place to help people unlock home’s value and functions well for military, people who move frequently
- 07:25 – The elimination of second homes; mortgage interest deduction won’t be used on second homes
- 07:34 – This affects not just executives or military; many people move regularly or have other living situations, and changing the rules negatively impacts those people
- 08:32 – National average for living in a house was 5-6 years, and has crept up to 7-9 with recession
- 09:44 – When the Homeowner’s Capital Gains Exemption was passed in 1997, it simplified the process from how it was before
- 10:14 – Resource to understand the whole picture: https://www.nar.realtor/ click “Federal Issues,” then “Tax Reform,” you can see maps, statistics
- 11:10 –Another resource: http://homeownershipmatters.realtor/
- 11:30 – Need tax reform, but the National Association of Realtors does not agree with changes proposed and they are intentionally moving quickly
- 12:30 – Obamacare is an example of something that was hastily passed
- 12:53 – Speaker Ryan has been telling Republican Conference that they must pass the tax reform or else they won’t do well in the 2018 election
- 13:11 – Jamie believes that, if bill is passed, people in high homeownership rates will learn the implications of the bill and they’ll do poorly in 2018
- 13:32 – It’ll impact realtors, but NAR and realtors are really the only voice for homeowners on capital hill
- 13:56 – Realtors invest in communities and represent their districts in a meaningful way
- 14:16 – Contact your elected officials by texting “Action” to 30644
- 14:30 – The NAR wants to hear the voice of consumers, too: go to http://homeownershipmatters.realtor/ to respond to the consumer call to action
3 Key Points
- The tax reform bill is speedily making its way through the house and senate.
- Use the above resources to educate yourself on the tax reform proposals and see how it impacts you.
- Tax reform is needed – but not on the backs of homeowners.