Real­tors: House tax plan would hurt home val­ues

The Palm Beach Post - - FRONT PAGE - By Jeff Ostrowski Palm Beach Post Staff Writer

WEST PALM BEACH — A tax bill mak­ing its way through the U.S. House of Rep­re­sen­ta­tives could slash Florida home val­ues by 13 per­cent, Real­tors said Mon­day.

Real­tors har­bor “grave con­cerns” about a Repub­li­can pro­posal to re­duce the tax de­duc­tion for mort­gage in­ter­est, end write-offs for prop­erty taxes and boost cap­i­tal-gains taxes on home sales, said Maria Wells, pres­i­dent of Florida Real­tors.

“That would af­fect the econ­omy in all sorts of ways,” Wells said Mon­day dur­ing a news con­fer­ence at the of­fices of the Real­tors of the Palm Beaches and Greater Fort Laud­erdale. “We know that hous­ing is the ca­nary in the coal mine.”

Pro­po­nents of the bill ar­gue that less gen­er­ous tax breaks for home­own­ers would be off­set by a near dou­bling of the stan­dard tax de­duc­tion, to $24,400 for mar­ried cou­ples in 2018.

Real­tors and many Democrats aren’t buy­ing that ar­gu­ment. They say less gen­er­ous tax in­cen­tives for home­own­er­ship could make

home­own­er­ship less at­trac- tive both to first-time buy­ers and to se­cond-home buy­ers.

“Most likely we are go­ing to see a sig­nif­i­cant drop in the value of peo­ple’s homes,” said U.S. Rep. Lois Frankel, D-West Palm Beach. “Why? Be­cause the de­mand for hous­ing will go down.”

The House bill would al­low home buy­ers tak­ing out new mort­gages to deduct in­ter­est on only $500,000 of debt, and only on one home. The pack­age does not al­low mort­gage-in­ter­est de­duc­tions for se­cond homes, or for home-eq­uity loans.

Re­flect­ing the mort­gage in­ter­est de­duc­tion’s sacro­sanct place in Amer­i­can pol­i­tics, the Se­nate’s ver­sion of tax re­form keeps de­duc­tions on a to­tal of $1 mil­lion of loans on up to two homes.

In an era of rock-bot­tom mort­gage rates, crit­ics say the mort­gage in­ter­est de­duc- tion is a ben­e­fit that ac­crues largely to the wealthy. But it’s a tax break that’s fiercely pro­tected by the Na­tional As­so­ci­a­tion of Real­tors, a trade asso- cia­tion with more than a mil­lion mem­bers and an ac­tive po­lit­i­cal ac­tion com­mit­tee.

Both the House and Se­nate bills also would rein in the tax break on prof­its from home sales. Mar­ried sell­ers owe no cap­i­tal gains taxes on $500,000 of profit on the sale of a pri­mary res­i­dence, while sin­gle tax­pay­ers can take a $250,000 profit taxfree. The new rules would re­quire sell­ers to live in a house for five of the pre­vi­ous eight years, rather than two of the past five years, to re­ceive the tax ex­emp­tion.

The pro­pos­als also would end the prac­tice of writ­ing off lo­cal prop­erty taxes. Add it all up, Real­tors say, and the tax pro­pos­als would dis­cour­age home­own­er­ship at a mo­ment when the real es­tate mar­ket still is shak­ing off the Great Re­ces­sion.

“We do not want to be­come a cul­ture of renters,” Wells said. “We want to be­come a cul­ture of home­own­ers.”

Some ob­servers say Real­tors are over­play­ing the ef­fect of a less gen­er­ous mort­gage in­ter­est de­duc­tion. The me­dian price of a house sold in Florida from July through Septem­ber was $240,000, ac­cord­ing to the Florida Real­tors, so rel­a­tively few buy­ers in the state would be af­fected by a $500,000 limit on mort­gage in­ter­est.

“For most peo­ple, this tax pack­age isn’t go­ing to have an im­pact,” said Univer­sity of Cen­tral Florida econ­o­mist Sean Snaith. “The pri­mary driver of why peo­ple buy homes is not to get a de­duc­tion on your mort­gage in­ter­est.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.