National Association of Realtors® on Fed Tax Reform

Changes to the Federal Tax Regulations as proposed by an advisory panel to President Bush threaten the vitality and the future strength of the real estate industry. The recommendations currently with the US Treasury Department make several policy changes that would undermine current advantages of home buyers and investors.

The advisory panel released these recommendations for tax reform.

*Replace the existing $1 million cap on mortgage interest deductions with the local FHA loan limit which ranges from $172,000-312,000, and change the deduction to a 15% credit taken against the amount of mortgage interest paid.

*Eliminate the deduction for state and local taxes, including property taxes, and the deduction for mortgage interest on second homes.

*Increase the gain to be excluded on the sale of a principle residence but reduce the frequency the deduction can be taken.

*Eliminate deductions for interest and taxes on commercial and investment properties.

While the recommendations are with the US Treasury Dept., under review for the President, the NAR Federal Taxation Committee has bolstered a campaign to spread the word on how harmful this would be to national home ownership. NAR and other industry groups are getting the word out of the potential economic impact on the housing market should these guidelines become official.