LEGISLATIVE AFFAIRS: NAR Releases 2019 Legislative Agenda
Philip Weiden | February 2019
The National Association of Realtors’ 2019 legislative agenda has been released. The industry has big goals ahead for 2019 with a new Congress that took power amid a month-long partial government shutdown. Some of the key NAR legislative agenda items are below. I will cover more agenda items in my column for the February print edition of Real Estate In-Depth.
Index to Inflation the Capital Gains Exclusion on Sale of Principal Residence—Current law provides sellers of a principal residence an exemption from capital gains tax of up to $250,000 ($500,000 for joint returns). This exclusion was never indexed for inflation, making it now worth only about half its original value. NAR is advocating this exclusion be indexed for inflation before the benefit shrinks even more.
Index to Inflation the $750,000 cap on Mortgage Interest Deduction—The 2017 tax changes lowered the amount of deductible mortgage debt to loans of not more than $750,000, which is not indexed for inflation. NAR is urging Congress to index this cap for future inflation so the limit does not pinch more homeowners each year.
Monitor Implementation and Facilitate the Use of Opportunity Zones—The new tax law also provided a bold new initiative to encourage investment in economically depressed areas throughout the U.S. Opportunity Zones are especially attractive to real property investments by providing significant deferral and exclusions in capital gains that are reinvested in qualified areas. NAR is working to help ensure the rules implementing the new OZs fulfill their promise.
Extension of Expired Mortgage Debt Cancellation Tax Relief—A longstanding, but temporary provision to provide relief from taxation for debtors who have been relieved of mortgage debt in connection with their principal residence expired at the end of 2017. NAR is advocating a retroactive extension of the exclusion.
20% Deduction on Qualified Business Income for Pass—Through Business Entities and Sole Proprietors—The 2017 tax law changes provide a significant tax benefit for real estate professionals who work for themselves or own S corporations, limited liability companies (LLCs) or partnerships. The new 20% deduction can greatly lower federal taxes, but is complex for many. NAR is working to ensure that the deduction is available to all real estate agents and brokers and that its application to rental real estate is straightforward.
National Flood Insurance Program—Congress must pass a long-term reauthorization of the NFIP and include meaningful reforms that open the door to private market flood insurance and modernize flood mapping and mitigation investments. Flood insurance is required for a mortgage in more than 20,000 communities nationwide. While there is a growing private market for flood insurance, millions of small business and home owners currently depend on the NFIP to protect their property against flooding, the most costly and common natural disaster in the United States. Without flood insurance, property owners would have to rely on the federal government for taxpayer-funded disaster relief after major floods. The program is set to expire on May 31, 2019.