There’s never been a better example of how your contribution to the REALTOR® Action Fund helps support the real estate industry. NAR and C.A.R. members helped reach members of Congress to get changes in the Republican Administration’s Tax Bill.
NAR helped educate members of the House-Senate conference committee, and after the vote, NAR President Elizabeth Mendenhall issued the following statement:
“We saved the exclusion for capital gains on the sale of a home and protected the mortgage interest deduction for second homes. Many agents and brokers who earn income from personal services will also see some significant new benefits in their business.
“Despite these successes, we still have some hard work ahead of us.”
Legislative initiatives often require fixes to address unintended consequences, and this bill is no exception. The new tax regime will “fundamentally alter the benefits of homeownership by nullifying incentives for individuals and families while keeping those incentives in place for large institutional investors,” says NAR. “That should concern any middle-class family looking to claim their piece of the American Dream.”
Although the final tax reform bill is far from perfect, it is significantly better for homeowners than previous versions: “That’s thanks to the efforts you made. REALTORS® generated over 300,000 emails and telephone calls to members of Congress over two Calls for Action and held countless in-person meetings with legislators, all of which helped shape the final product.”
Last-minute changes to the bill include the following improvements:
Capital gains exclusion. In a huge win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.
Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000.
State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.
Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities. This change will lower the taxes of many real estate professionals.