Saturday, October 20 , 2018, 8:39 am | Fair 55º

 
 
 
 

David Kim: Real Estate Industry Not Pleased with Trump’s Tax Plan

President Trump’s proposed tax plan has been met largely with disapproval from the housing industry, with several constituents concerned about a change that would double the standard deduction, and, in effect, invalidate the tax benefits of owning a home.

“For roughly 75 million homeowners across the country, their home is more than just a number,” said National Association of REALTORS® (NAR) President Bill Brown in a statement on the plan.

“It represents their ambitions, their nest egg, and the place where memories are made with family and friends. Targeted tax incentives are in place to help people get there," Brown said.

"The mortgage interest deduction and the state and local tax deduction make homeownership more affordable, while 1031 like-kind exchanges help investors keep inventory on the market and money flowing to local communities," he said.

"Those tax incentives are at risk in the plan released [this week],” Brown said.

The outcome of the changes, should they be enacted, could be devastating to homeownership, according to Brown.

“Current homeowners could very well see their home’s value plummet and their equity evaporate if tax reform nullifies or eliminates the tax incentives they depend on, while prospective homeowners will see that dream pushed further out of reach,” he said.

National Association of Home Builders (NAHB) Chairman Granger MacDonald shared similar sentiments.

“Doubling the standard deduction could severely marginalize the mortgage interest deduction, which would reduce housing demand and lead to lower home values,” said MacDonald in a statement.

The changes could have an inverse impact, as well, on lower-income households, according to Diane Yentel, president and CEO of the National Low Income Housing Coalition (NLIHC).

“By raising the standard deduction, Mr. Trump’s tax plan would lead to fewer households claiming the mortgage interest deduction (MID) — a $70 billion tax write-off that primarily benefits higher-income households,” said Yentel in a statement.

“Without additional reforms to provide a greater tax benefit to low- and moderate-income homeowners and to reinvest the savings into providing affordable rental homes to those with the greatest needs, Mr. Trump’s proposal would amplify MID’s regressive effect; only the wealthiest Americans would benefit,” Yentel said.

Brown also pointed to the majority share of federal income taxes paid by homeowners, cautioning that they could shoulder even more responsibility if the changes take effect.

“As it stands, homeowners already pay between 80 and 90 percent of the U.S. federal income tax,” said Brown. “Without tax incentives for homeownership, those numbers could rise even further.

“Common sense says that owning a home isn’t the same as renting one, and America’s tax code shouldn’t treat those activities the same either,” Brown said.

“While we appreciate the administration’s stated commitment to protecting homeownership, this plan does anything but,” he said.

National Economic Council Director Gary Cohn reiterated the administration’s intent to preserve homeownership in a briefing on the plan. “Homeownership, charitable giving and retirement savings will be protected,” Cohn said.

— David Kim is a licensed real estate broker with Village Properties and the 2017 president of the Santa Barbara Association of Realtors. Contact him at [email protected] or 805.296.0662. The opinions expressed are his own.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made using a credit card, Apple Pay or Google Pay, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Email
Select your monthly membership
Or choose an annual membership
×

Payment Information

Membership Subscription

You are enrolling in . Thank you for joining the Hawks Club.

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.
You may cancel your membership at any time by sending an email to .(JavaScript must be enabled to view this email address).

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >

Meet Your Realtor Sponsored by Village Properties

Photo of Gary Welterlen and Carla Reeves
Gary Welterlen and Carla Reeves
"We both love this business. We strive to make life long relationships from each real estate transaction."

Full Profile >