As leading advocates for homeownership on the Peninsula and in the South Bay, members of the Silicon Valley Association of REALTORS® (SILVAR) keep track of local, state and national issues that affect homeownership and private property rights. This month REALTORS® were alerted to issues being explored by lawmakers in Washington, D.C. that could affect homeowners.
National Association of REALTORS® (NAR) Senior Political Representative Chris Gosselin told members of SILVAR that NAR does not expect Congress to do anything that will impact housing between now and the November election, but come January 2015, "it will be a new ball game," said Gosselin.
The future of the mortgage interest deduction (MID is high on the list of REALTOR® concerns, said Gosselin. "The mortgage interest deduction is important because real estate has such a positive benefit in the tax code. The MID is also the most tangible benefit for homeowners," said Gosselin. "Even most renters support the MID because they aspire to be homeowners someday."
Gosselin said members of Congress have shunned away from proposals to eliminate the MID, but there are discussions to limit the amount of mortgage debt eligible for the interest deduction to $500,000 from the current $1 million. This move would negatively impact homeowners in high-cost areas like California and D.C. Gosselin said NAR is attempting to educate members of Congress who hail from other parts of the country and make them understand that people in high-cost places have much higher salaries than the rest of the country, but a much higher proportion of their income goes to housing.
NAR is watching discussions on changes to the capital gains exclusion. 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. There is a proposal to change the residence requirement to five of the past eight years.
NAR is guarding against any proposal that could change the conforming loan limits, eliminate the deductibility of state and local taxes, or repeal a special rule allowing deferral of gains on like-kind exchanges of 1031 investment properties.
Gosselin said proposals to limit government's role in the mortgage finance market would impact long-term fixed rate loan options. He explained without a government role in the mortgage market, the 30-year fixed rate loan option would not exist and this could seriously impact affordability. There is also talk of converting the Federal Housing Administration (FHA) program to a first-time home buyer program.
This year the national REALTOR® association successfully urged Congress to pass legislation to curb some of the skyrocketing premium increases under the National Flood Insurance Program. REALTORS® also successfully lobbied to end the controversial FHA payoff rule, which required borrowers to pay the full month's interest no matter what day of the month they settled their loan. FHA's full-month interest policy will end on Jan. 21, but only applies to future borrowers.
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.