Fear Ripples Through Real Estate Industry Ahead Of Proposed Tax Reforms
Commercial real estate trade groups are preparing for battle.
The National Apartment Association, the National Multifamily Housing Council and the National Association of Realtors are pushing back against President Donald Trump's proposed tax reform efforts that could enact changes that would hurt home sales and cut charitable contributions.
Congress has spent the better part of August trying to find ways to lower the corporate tax rate, but it is changes to personal income tax that realtors, homebuilders, mortgage lenders and charitable organizations are concerned about, Reuters reports.
In May, Protect the Lease, a national grassroots campaign, was launched by the National Apartment Association and the National Multifamily Housing Council in response to changes to the tax policy, which many multifamily professionals viewed as an effort to avoid a ripple in the industry similar to the one caused by the 1986 Tax Reform Act.
Republicans have most recently proposed the elimination of almost all tax write-offs, both state and local, Reuters reports. This would remove the need for itemizing deductions, claiming charitable contributions and interest paid on mortgages. Currently about 30 million taxpayers claim mortgage interest rate deductions with another $13B in charitable deductions being claimed each year.
Also on the chopping block is the 1031 exchange provision, which allows sellers of certain assets to defer capital gains by reinvesting the proceeds of the sale into like-kind properties, along with the net interest deduction — a tax deduction that allows real estate investors and developers to convert income into capital gains at a lower tax rate. Some lawmakers criticize these measures as tax loopholes that do little to help the overall economy.