Tax reform could devalue Fla. homes (and commissions) 13%
Act now: Homeownership is our life
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WASHINGTON – Nov. 1, 2017 – If homeowners can deduct the interest they pay on their mortgage, the overall cost of that mortgage goes down. However, the national tax-reform debate has expanded beyond the simple mortgage interest deduction (MID), and Congress may change the fundamental way incomes taxes have worked for years.
The dominant proposals now make homeownership less desirable overall. As currently written, the MID will become worthless for anyone other than the rich, and the ability to deduct real estate taxes could possibly disappear altogether.
Florida taxpayers pay the price
The MID: In 2014, the average Florida taxpayer who claimed the MID subtracted $9,100 from his or her taxable income as a result, according to NAR research. Floridians at the IRS’s marginal rate of 25 percent saved $2,280 in taxes as a direct result of the MID.
Property taxes: The average taxpayer claiming the real estate tax deduction subtracted $4,850 from taxable income in 2014, according to NAR research. At that same marginal tax rate of 25 percent, the average Florida taxpayer saved $1,220 in taxes as a direct result.
Home values: The MID and property tax deduction losses would have devalued Florida homes by 13 percent in 2014, NAR says. For a median Florida home value of $166,900 that year, it would mean a loss of $21,900 for the typical homeowner.
Home values over time: Those numbers – a combined cost of $3,500 for both taxes in 2014 – would continue year after year.
NAR says that the financial hit to all Floridians would have been $139,624,891,000 in lost savings in 2014.
“Realtors reject proposals that repeal or weaken tax incentives to encourage homeownership,” NAR said in a statement. “We need tax reform, but it must first do no harm.”
The tax changes could lead to a United States where many middle-class homeowners pay more taxes than renters. Homeowners already pay 83 percent of all federal income taxes – a share would likely go higher under the proposed reform framework. It could also make any future recession far worse than the recent Great Recession.
To make your voice heard, link to NAR’s Call for Action, fill in a few boxes, and allow NAR to send an email to your personal representatives in Congress. This is important for homeowners. It’s important for you.