Lawmakers in the House and Senate passed tax reform legislation today, paving the way for the bill to go to President Donald Trump for his signature. The President has said he intends to sign the bill by Christmas.
NAR worked with members of the House-Senate conference committee to help educate them on how to improve the final bill. After the vote, President Elizabeth Mendenhall issued the following statement:
“The results are mixed. We saved the exclusion for capital gains on the sale of a home and protected the mortgage interest deduction for second homes. Many agents and brokers who earn income from personal services will also see some significant new benefits in their business.
Despite these successes, we still have some hard work ahead of us. Significant legislative initiatives often require fixes to address unintended consequences, and this bill is no exception. The new tax regime will fundamentally alter the benefits of homeownership by nullifying incentives for individuals and families while keeping those incentives in place for large institutional investors.
That should concern any middle-class family looking to claim their piece of the American Dream.”
Although the final tax reform bill is far from perfect, it is significantly better for homeowners than previous versions. That’s thanks to the efforts you made. REALTORS® generated over 300,000 emails and telephone calls to members of Congress over two Calls for Action and held countless in-person meetings with legislators, all of which helped shape the final product.
Last-minute changes to the bill include the following improvements:
• Capital gains exclusion. In a huge win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.
• Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000.
• State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.
• Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities. This change will lower the taxes of many real estate professionals.
Enactment of the bill does not end NAR’s effort to reduce the negative impact on homeowners. “REALTORS®’ work on tax issues will continue,” says Mendenhall, “and we look forward to joining members of Congress from both sides of the rotunda on that endeavor.”