Joseph Rand does not like the proposed federal tax reform bill, and he’s not shy about saying so. In an opinion piece for Inman News, Rand writes: “This is not a good tax bill for housing or the industry.”
President Trump and the Republican congressional leadership have proposed a new tax bill. The bill consolidates some income tax rates, lowers the corporate tax rate, reduces the tax rate for certain pass-through businesses, eliminates the estate tax and takes away many long-established deductions and exemptions.
Sounds great, right?
Well, it’s terrible for housing. Really terrible.
Rand, predicts that this bill – if passed – would further depress already historically low home ownership. His 5 top concerns are:
- The bill reduces the value of the mortgage interest deduction for new buyers and will adversely impact higher-priced homes ($500,000+)
- The bill requires people to stay in their homes longer to get the capital gains exemption
- The bill makes homes with high property taxes much less attractive
- The bill eliminates the deduction for moving expenses
- The bill makes second homes and vacation homes much more expensive
Rand goes on to note,
Here’s what’s also kind of strange — on top of all these disincentives to buy or sell a home, the tax bill simultaneously creates or preserves a number of advantages for owning investment property. In other words, the tax bill is bad for homeowners but not for real estate investors. Odd, right?
I don’t think it is odd at all, given the authors/backers of this bill.
Joseph Rand is not alone in his negative opinion of the House and Senate tax bills.
Elizabeth Mendenhall, president of the National Association of Realtors, released a statement, saying:
While we are still reviewing the outlines of this proposal, we are watching closely for changes to current law that might leave middle-class homeowners – and homeownership broadly – in a worse place than it is today. We’ve already seen that a near-doubling of the standard deduction, combined with the elimination of other deductions like the state-and-local tax deduction, can turn the American Dream into a nightmare for families, as the rug is pulled out from under them. Simply preserving the mortgage interest deduction in name only isn’t enough to protect homeownership.