Federal Legislation on the Spring/Summer Docket

ITEMIZED DEDUCTIONS ON THE CHOPPING BLOCK
The leaders of the congressional tax-writing committees and President Trump have expressed a strong desire to accomplish tax reform. Realtors® are facing an environment that includes the real possibility of serious changes to federal tax law. Realtors® have lobbied successfully to protect the Mortgage Interest Deduction (MID), which most legislators support. However, proposed tax reform plans might unwittingly cause more harm to the real estate industry than a repeal of the MID.

The reason for concern is that a central feature of each of the proposed tax reform plans is the elimination of all or most itemized deductions, except the MID and the deduction for charitable contributions. Along with these changes, the standard deduction would be nearly doubled. While at first glance, it may seem that retaining the MID would hold homeownership tax incentives harmless, this is far from the case. In reality, a plan that eliminates most itemized deductions, while doubling the standard deduction, would mean that only about 5 percent of taxpayers would claim itemized deductions, down from about one third under the current law.

For the great majority of Americans, there would no longer be a tax difference between owning a home and renting one. Any modification of real estate-related tax benefits in the current economy could do serious damage. It would create uncertainty for prospective purchasers, would decrease the incentive for first-time home buyers, and could lead to a drop in the value of existing homes.

Tax reform legislation is likely to come into focus this summer, and NVAR expects to call on all members to take action in support of homeownership. Realtors® are not opposed to tax reform. The National Association of Realtors® acknowledges the complexity of the current tax system, but asserts that reforms must support the goals of homeownership and freedom to buy, maintain and sell real estate. Homeownership is not a special interest, nor a tax loophole.



NATIONAL FLOOD INSURANCE PROGRAM SET TO EXPIRE, FACES BUDGET CUTS
Congress must reauthorize the National Flood Insurance Program (NFIP) to continue providing flood insurance after September 30, 2017. Without the NFIP, millions of home- and small business owners nationwide, not just those in coastal or waterfront areas, will not be able to obtain a mortgage or insurance to protect their property against the most expensive and common natural disaster in the U.S.: flooding.

A program lapse could delay or derail more than 1,300 transactions each day, or nearly 40,000 real estate transactions every month. In addition to this pending program sunset, the president’s budget proposal eliminates $190 million in federal funding for flood mapping and cuts $667 million from flood mitigation grant programs.

Realtors® are supporting a renewed and strengthened federal flood insurance program with long-term viability. As of the date of publication, legislation has not yet moved, but Congress is expected to act quickly toward reauthorization, with the House likely to consider legislation in late spring.

Watch for additional updates and possible calls for action from the NAR and NVAR Government Affairs teams on these and other critical issues in the coming months.