Kevin Cramer’s tax reform bill is bad for Home Builders and Realtors

Groups say bill will raise taxes on middle class and harm home values

After House Republicans released their tax reform bill last week, the National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) both came out in opposition to the bill. Congressional candidate Ben Hanson is a Commercial Broker for Archer Real Estate Services.

“As a Realtor, and having worked alongside NAHB and NAR, I’ve seen firsthand that they understand policies that impact homeowners better than anybody,” said Hanson. “These organizations have made it clear that the GOP’s reform bill would raise taxes on millions of middle class Americans. Any reform bill that raises taxes on the middle class should be rejected out of hand, so I find it disappointing that Kevin Cramer said this bill ‘works for’ those who need tax cuts the most.

“Owning a home is a critical piece of the American Dream. By cutting longstanding support in Congress for homeownership, Cramer and his Republican colleagues are betraying tens of millions of middle class Americans and making their lives more difficult. Cramer should listen to home-builders and -owners and enact policies that benefit those who have helped build the middle class.”

“NAHB believes this plan will ultimately harm home values, act as a tax on middle-class home owners and discourage younger, first-time home buyers from entering the market,” said NAHB Chairman Granger MacDonald. “NAHB came out in strong opposition to the plan because it severely marginalized existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives.”

The Republican bill “threatens home values and takes money straight from the pockets of homeowners,” said NAR President William E. Brown. “Realtors believe in the promise of lower tax rates, but this bill is nowhere near as good a deal as the one middle-class homeowners get under current law. Tax hikes and falling home prices are a one-two punch that homeowners simply can’t afford.”

Hanson is currently a member of the Home Builders Association of Fargo-Moorhead Public Issues Committee. He’s the former Chair of the Government Relations Committee of the Fargo-Moorhead Area Association of Realtors, a local NAR charter. He also previously served as the Government Relations Chair of the North Dakota and South Dakota chapter of the International Council of Shopping Centers; the Fargo-Moorhead Association of Realtors and Home Builders Association of Fargo-Moorhead joint Special Assessments Task Force; and the Fargo-Moorhead Association of Realtors “Realtor PAC” Committee.

Background on GOP Tax Plan

• Property taxes: It allows home owners to deduct up to $10,000 in property taxes. Even by keeping this $10,000 figure, NAHB estimates a 60 percent decline in the number of itemizers earning between $100,000 and $200,000. As for the $10,000 property tax cap, 3.7 million households paid more than $10,000 in property tax according to our analysis of Census data. More than 30 percent of home owners who live in New York and New Jersey pay more than $10,000 in property taxes.
• State and local taxes: Deductions are eliminated for state and local income taxes.
• Capital gains exclusion: The capital gains exclusion for selling a home ($250,000 for a single filer and $500,000 for a married couple) would be modified from the current two of five years rule to five of eight years. In another words, you must live in your primary residence for five of the past eight years in order to claim the capital gains exclusion when you sell your home.
• Business interest deduction: This would be capped at 30 percent of earnings before interest, taxes, depreciation and amortization, which is a measure of cash flow. Real estate and small businesses ($25 million gross receipts test) are exempt from the cap.
• Marginal tax rates:

Singles:
12 percent up to $45,000*
25 percent up to $200,000
35 percent up to $500,000
39.6 percent over $500,000

Married:
12 percent up to $90,000*
25 percent up to $260,000
35 percent up to $1 million
39.6 percent over $1 million

* Benefits of 12 percent bracket would be phased out at higher incomes.

• Standard Deduction: Raises the standard deduction from $6,350 to $12,200 for individuals and $12,700 to $24,400 for married couples.
• Low-Income Housing Tax Credit: This will remain in the tax code, but private activity bonds would be eliminated, greatly reducing affordable housing production.
• Carried interest: The bill preserves the carried interest tax break.
• Like-kind exchanges: This provision is preserved for real estate.
• Estate tax: Increases the current $5.49 million exemption to $10 million and repeals the estate tax after six years.