Tax reform that would affect real estate has been the talk of the industry recently, and we can expect the conversation to gain steam as we move toward 2015. Like it or not, these discussions are going to impact how we do business and how we educate our clients.
Although it’s highly unlikely we’ll see major changes this year, lawmakers are beginning to look at overhauling, or at least adjusting, some tax benefits homeowners have traditionally enjoyed, such as the mortgage-interest deduction, property-tax deduction and capital-gains taxes on property sales.
We’ll likely see tax reform changes eventually, but it’s probable that most homeowners won’t be significantly impacted. The question is one of degree, and of timing. Legislation, like tax reform, typically moves glacially at best, especially in an election year.
You may already be hearing from past clients or prospective buyers who’ve read about the proposed reforms. Some might be wondering whether restrictions on, or elimination of, various long-time tax benefits could impact them. From what I’ve heard, the discussions among lawmakers focus largely on reducing tax benefits for the wealthiest Americans, particularly where the mortgage-interest deduction is concerned.
Some of the current chatter results from a comprehensive tax reform draft released in late February by House Ways and Means Committee Chairman Dave Camp, R-Mich. At nearly 1,000 pages, the plan features significant changes to many aspects of the tax code, including several potential reforms related to the advantages of owning over renting.
When the proposal came out, the National Association of REALTORS® quickly developed a brief that outlined the “Top 10 Things for REALTORS® to Know About the Camp Tax Reform Proposal.” The overview did a good job of analyzing the potential impact the drafted plan might have on our industry. Briefs such as this go a long way in keeping us all informed and updated about possible changes. They’re definitely worth our time and attention.
The reality is that although there’s now a proposal on paper, it is far from becoming a law. It’s simply a draft at this point; no real cause for immediate concern.
Besides, even if and when tax reform comes, owning a home will remain the preference of most people. Homeownership rates may dip a bit more, but the tangible and intangible benefits of owning will never really go away. Owning a home means paying your own mortgage—not your landlord’s. It means building equity and personal wealth. It means enjoying stability and a sense of community. Real estate agents should continue to communicate those benefits as much as possible.
Reform may not be an immediate possibility, but as professionals on the front lines with buyers and sellers, we need to stay abreast of these important discussions. We must also make our voices heard if lawmakers pursue policies that would do more harm than good.
One great resource is the National Association of REALTORS®’ REALTOR® Action Center at realtoractioncenter.com. There, you’ll find the latest news, legislative updates and REALTOR® Calls to Action on these issues and more. Make it a point to read up on real estate news, sign up for Google News Alerts, and stay engaged through your local and state real estate associations.
When questionable legislation arises, we should speak up. Our buyers and sellers depend on us to not only be their advocates in a real estate transaction, but also in the broader realm of real estate policy. We owe it to them to do our part.
Margaret Kelly (CRB) is chief executive officer of RE/MAX, LLC.
For more information, visit www.remax.com.