Tax reform is a topic that comes up every few years and now we’re at the beginning of another possible go-round, but this time it’s a little different because the Senate Finance Committee wants to start from scratch. That’s old news by now. The committee’s “blank slate” approach has been widely talked about in the media. But one thing you likely haven’t heard in the media is exactly how this process is going to play out. There’s certainly been speculation on how it will play out, but it’s safe to say that this approach really creates a novel situation, and it will be interesting for everyone to see what actually happens.
One thing we know is, NAR very much wants to preserve the provisions in the Tax Code that help keep the economy strong by supporting a vibrant real estate market. This week it asked its members to let their senators know they want to keep residential and commercial real estate provisions in the Tax Code. This gives REALTORS® a chance to remind senators just how integral to our economy real estate is.
There are a number of provisions REALTORS® are asking senators to focus on. Among them are the deductions for mortgage interest and property taxes, and the exclusion of home sale proceeds from capital gains taxes (up to $500,000 for a couple filing jointly). The extension of mortgage debt relief is another. That provision excludes debt forgiveness from taxation as income.
On the commercial side, depreciation and 1031 tax-deferred exchanges are among the association’s priorities.
However tax reform plays out this time, you can be sure it’ll be a long process and there will be many twists and turns. And that’s just in the Senate. The House will have its own version (already the chairman of the Ways & Means Committee has held hearings and work groups). You can imagine it will be a very involved road ahead as the two houses write their bills and then reconcile them into something that can go to the president.
Yet within this very long process will be key moments when people must step up and stand behind their interests, and this is one of those times. Senators must know now what provisions are critical for real estate. That’s why NAR is asking its members to contact their senators.
To learn more about what’s happening, REALTOR® Magazine interviewed two NAR Government Affairs staffers, the association’s Director of Tax Policy Evan Liddiard and one of its senior legislative representatives, Ken Wingert, in this short video.