GATEWAY PERSPECTIVES: It Ain’t Over Till It’s Over
Richard Haggerty | December 13, 2017
I entitled my December column last year, “Blink of an Eye,” and it certainly does feel like the years go by more and more quickly. However, I must confess that from a political stand point, it seems like about four years of politics were jammed into 2017 instead of just one. In many respects it’s been a rather scary roller coaster ride this year, constantly hoping that the roller coaster didn’t come off the rails when Congress decided to tackle tax reform. Hopefully, when all the dust settles, Congress will enact a bill that makes sense for the economy and homeowners alike.
There are significant flaws in the respective Senate and House of Representatives’ bills that are now headed to a reconciliation process. This reconciliation process is necessary because the House does not have the necessary support to pass the Senate version, so once a “reconciled” bill is agreed to, the new bill must be debated and passed again by both bodies. Of the two bills, the Senate version is the slightly lesser of two evils, as it maintains the current mortgage interest deduction (MID) and maintains MID for second homes. However, both bills repeal the deduction for state and local taxes and cap the deduction for property taxes at $10,000.
So where does that leave the proposals that will negatively impact housing? First, I believe we have to acknowledge that collectively we already have had a positive impact on the proposed legislation. As an example, both the House and Senate have agreed to maintain deductibility of state and local property taxes up to $10,000, and to maintain Section 1031 tax-deferred exchanges for real estate investments in their present form. In earlier versions of the bill, this was not the case.
However, as the saying goes, “It ain’t over till it’s over,” and even then it’s still not over! As NAR has indicated in its most recent Call to Action, Realtors still have an opportunity to influence Congress to help make the tax reform bill more favorable to homeowners and consumers. During the current reconciliation process improvements to the legislation are possible by encouraging Congress to maintain the current law for the mortgage interest deduction and capital gains. Congress can also address the State and Local Tax Deductibility issue by expanding the provision to include income taxes, raising the cap and indexing the cap to inflation. These changes and retaining the current law makes the bill more favorable to homeownership.
We have to continue to exert pressure and respond to the calls to action. Now is not the time to throw in the towel. This process is ongoing and we need to keep up the pressure!
On a statewide basis, all members should have received an e-mail from NYSAR President Dawn Carpenter concerning the NY First Home bill, which has now been sent to Gov. Andrew Cuomo for his consideration. As President Carpenter says in her e-mail, the NY First Home initiative would allow New Yorkers to establish a tax-free savings account to help them save for the purchase of their first home and achieve the dream of homeownership. If NY First Home is signed into law, New Yorkers could:
• Deposit up to $5,000 annually ($10,000 for couples) in a special savings account to go toward the purchase of a first home in New York State;
• Receive a state income tax deduction on the principal investment and any gains would not be subject to state income tax;
• Apply the savings and any interest earned toward closing costs and down payment for the purchase of a first home in New York State.
Thanks to Realtor efforts, this bill has strong bipartisan support in the State Legislature, but now we need to make our voices heard by the governor.
Please TAKE ACTION (https://realtorparty.realtoractioncenter.com/site/Advocacy?cmd=display&page=UserAction&id=5021) and tell Gov. Cuomo to sign the NY First Home bill!
On a personal note, on behalf of myself and the HGAR/HGMLS staff, I wish all of you a wonderful and safe holiday season and our best wishes for a prosperous and healthy New Year!