Real estate industry fights to preserve real estate tax deductions
November 11, 2005
Congressman, home builders take aim at tax reform
A congressman, speaking during a National Association of Home Builders conference call Thursday, pledged that any effort to eliminate or reduce the mortgage interest deduction or eliminate property and sales tax deductions "would be dead on arrival" in Congress.
While the President's Advisory Panel on Federal Tax Reform has recommended changes to tax law, real estate industry groups are fighting to ensure those recommendations do not amount to major changes for homeowners that benefit from federal, state and local tax incentives.
"Since these recommendations have come out, I've certainly heard a real sense of alarm from my constituents. They are very concerned about a proposal to eliminate or greatly reduce the mortgage interest deduction, as well as the deduction for state and local taxes. They recognize that means they're going to pay higher taxes," said U.S. Rep. Jerry Weller, R-Ill., a member of the House Ways and Means Committee.
"Both of these proposals would be dead on arrival in the House Ways and Means Committee," he said. Weller added that he has reached out to a group of Republican lawmakers on the committee, and they have signed a letter to encourage President Bush to reject tax panel's recommendations.
Officials at the home builders' trade group and the National Association of Realtors, for example, have lashed out against the tax panel's recommendations, and vowed to fight against any proposals that would negatively impact homeowners and home ownership.
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The home builders' group paid for a survey this month that found strong support among consumers for the mortgage interest tax deduction and deductions for state and local taxes, including property taxes. The group also prepared a study of how individual homeowners in different parts of the country might be impacted by adopting the tax panel's recommended reforms.
Jerry Howard, CEO and executive vice president for the builders' association, said the tax panel's recommendations appear "out of touch with the American people." Howard also said that current homeowners planned to benefit from tax incentives when they bought their homes, and they should not be punished for their purchase. "It just seems like you're changing the rules in the middle of the game and that's patently unfair," he said.
David Wilson, president of the home builders' association, said the tax proposals, if adopted, "Would reduce housing values and send a chill throughout the housing market," adding that homeowners in high-cost areas like California and Florida "would bear the brunt" of the tax blow. "It would cripple markets that rely on second-home (buyers)."
U.S. homeowners save about $70 billion in taxes from deducting mortgage interest on their homes, said David Pressly, president-elect for the homebuilders' group. "Newest homeowners will probably be hit the hardest," he also said, as about 18 million people bought homes in the last three years and "most of these have significant mortgage interest payments and virtually all of them are counting on (deductions) to keep it at low levels."
Copyright 2005 Inman News