National Association of REALTORS® (NAR) president Steve Brown expressed the association's strong opposition and extreme disappointment regarding a draft for comprehensive reform of the tax code by U.S. Representative Dave Camp (R-MI), chairman of the House Ways and Means Committee.
In a statement released shortly after the proposal was unveiled last week, Brown said, "NAR supports reforms that promote economic growth, but we strongly oppose severely altering the rules that govern ownership and investment in real estate …We are extremely disappointed with several of the provisions contained in U.S. House Ways and Means Chairman Dave Camp's tax reform draft released today, namely proposed limits on the mortgage interest deduction and capital gains, and the repeal of deductions for state and local property taxes. These proposed changes to the taxation of real estate will impact every single American, either directly or indirectly."
Among the many provisions outlined in the draft legislation was a proposal to reduce the mortgage interest deduction. The proposal would limit the amount of mortgage debt eligible for the interest deduction to $500,000 from the current $1 million.
The proposal also calls for tighter requirements for excluding gains on the sale of a principal residence. Currently, homeowners can exclude up to $250,000 in gains ($500,000 for married couples) on the sale of a home that has been their principal residence for two out of the five previous years, and they can claim this exclusion every five years. Camp's proposal would change the residence requirement to five of the past eight years.
The proposal also would eliminate the deductibility of state and local taxes and seeks to repeal a special rule allowing deferral of gains on like-kind exchanges of 1031 investment properties.
"These proposals are only meant to be a discussion draft. In light of the political landscape and timeline, it is doubtful Congress will be able to tackle any tax reform bill in an election year. However, NAR will carefully analyze the details of the plan so REALTORS® can best educate Congress and the public about how this plan would impact the owners, consumers, and producers of both residential and commercial real estate," said David Tonna, president of the Silicon Valley Association of REALTORS®.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.