In an outpouring of letters to their elected representatives, REALTORS® were influential in spurring Congress to make key changes in the House and Senate tax reform plans, says Elizabeth Mendenhall, president of the National Association of REALTORS®. But as lawmakers prepare to reconcile the two proposals into one bill, more work needs to be done to protect the country’s middle-class homeowners.
“REALTORS® support tax cuts when done in a fiscally responsible way,” Mendenhall said in a statement Monday. “We’ve made our voices heard, and we’ll continue to do everything we can to help shape the debate as lawmakers consider legislation that’s this important to America’s homeowners.”
She cited a change in the Senate version of the bill to keep the state and local property tax deduction in place rather than eliminating it entirely, as originally proposed. Like the House bill, the Senate version caps the deduction at $10,000. In addition, both bills keep 1031 tax-deferred like-kind exchanges in place—something NAR has been urging forcefully for the last year. “We were very clear that these exchanges are crucial to the buying and selling of investment properties, including by mom-and-pop owners who rely on the ability to defer taxes on their investment to build wealth over time,” Mendenhall said.
The House passed its version of tax reform Nov. 18, and the Senate passed its bill over the weekend. A conference between the two chambers to hammer out differences between their bills is expected this week. NAR still seeks to change rules stipulating how long homeowners must live in their primary residence before qualifying for the capital gains exclusion on the proceeds of the sale. Today, homeowners must live in their home for at least two of the last five years in order to exclude up to $250,000 in gain from being taxed for individuals and $500,000 for married couples. Both the House and Senate bills would lengthen the requirement to five of the last eight years, which NAR says is too long.
NAR is also seeking to leave the mortgage interest deduction in place with its existing $1 million mortgage cap. The House wants to reduce that to $500,000, while the Senate keeps it at its current level.
As the House and Senate debated their respective bills, almost 215,000 REALTORS® sent letters to their members of Congress. Mendenhall said that kind of response has been instrumental in educating lawmakers about the impact tax reform could have on homeownership—but the job isn’t done yet. “We’ve seen how important it is for REALTORS® to stay engaged,” Mendenhall said. “We’re asking all of our members to look for another call for action so we can make sure lawmakers know exactly where we stand on behalf of homeowners as they work on this legislation.”
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—Robert Freedman, REALTOR® Magazine
