Updated: Illinois REALTOR® takes fight over tax reform to Capitol Hill today

 

REALTOR® Mike Drews meets with U.S. Rep. Randy Hultgren in Washington, D.C., to discuss tax reform proposals which could hurt Illinois property owners.

Illinois REALTORS® past president Mike Drews is in Washington, D.C., today to press the case for responsible tax reform.

Drews is visiting the Hill as part of an effort to make sure Illinois lawmakers know that the current House version of a tax code overhaul would unfairly hurt property owners in Illinois by eliminating tax deductions and ultimately lowering home prices by as much as 10 percent.

Drews is a Federal Political Coordinator for U.S. Rep. Randy Hultgren. FPC’s, as they are called, serve as a valuable conduit for information between REALTORS® and federal officials.

Drews said Hultgren was interested in the data REALTORS® provided. “We gave him a lot of information,” Drews said of the Tuesday morning meeting.

The visit is part of a nationwide push on the part of REALTORS® to make sure the message gets through to the House members who could vote later this week on a package of reforms.

Nearly 30 percent of Illinois REALTORS® have responded to a Call for Action urging lawmakers to proceed with care when reforming the tax code. (Take part here).

REALTORS® are not against tax reform, but are concerned about protecting the Mortgage Interest Deduction and deductions for state and local taxes. As drafted, the proposal now would:

  • Increase the standard deduction on  tax returns, which could put home ownership incentives beyond the reach of many families.
  • Limit capital gains from the sale of a primary residence. Homeowners would have to live in a property five of eight years, rather than the current two of five years to realize this benefit.
  • Important deductions disappear, most notably the state and local tax deduction, which would unfairly hit a high-tax state such as Illinois. The loss of deductions ranging from interest on student loans to medical expenses to even moving expenses further chips away at home ownership.

 

 

 

With REALTOR® support, Will County Board passes state and local tax resolution

The Will County Board passed a resolution that asks federal legislators to preserve the state and local tax deduction when considering tax reform. (Bigstock Photo)

The Will County Board is discouraging its congressional representatives from eliminating the State and Local Tax (SALT) deduction as part of federal tax reform, maintaining that it will have a disproportionately negative effect on middle class homeowners, especially in Illinois.

Will County Board Member Mike Fricilone, who is also the chair of the county’s finance committee, helped develop a resolution that emphasized the importance of the SALT deduction. The resolution, which was supported by Illinois REALTORS®, was passed by the county’s finance committee and the full county board, and board members pledged to share it with their federal legislators.

When the White House and Congress first announced their federal tax reform plans, REALTORS® sounded the alarm. One portion of the proposal would eliminate SALT, amounting to double taxation and would hit high property tax states like Illinois especially hard.

In Will County, more than 125,000 homeowners save an average of $2,000 a year using the SALT deduction, according to an article in the Herald-News.

Fricilone

During Fricilone’s July visit to Capitol Hill on behalf of Will County and the National Association of Counties, he defended the merits of the 104-year-old SALT deduction.

To raise awareness of the issue, a video of Fricilone was distributed to other counties across the country. A significant amount of double taxation would hit homeowners if the SALT deduction is repealed, he said.

Fricilone, of Homer Glen, is a long-time champion of private property rights and REALTOR® issues.

 

 

Callan meets with Roskam at tax policy luncheon

U.S. Rep. Peter Roskam, left, talks with Illinois REALTOR® Pat Callan in Washington, D.C.

Illinois REALTOR® Pat Callan met with U.S. Rep. Peter Roskam in Washington, D.C. on Tuesday.

Callan, a former Illinois REALTORS® president who serves as federal political coordinator for Roskam, helped host a lunch the congressman attended at the D.C. headquarters of the National Association of REALTORS®. At the lunch, industry leaders discussed upcoming efforts to revise the nation’s tax code.

Federal political coordinators work closely with assigned congressional representatives to update them on market conditions and the impact of policy decisions on the real estate industry.

Roskam, serves as chairman of the House Ways and Means Subcommittee on Tax Policy, which will play a key role in any attempt at tax reform. He represents Illinois’ Sixth Congressional District.

REALTORS® have been especially wary of the tax code rewrite effort. Key provisions such as the Mortgage Interest Deduction and 1031 Like-Kind Exchange are seen as potentially vulnerable in the process.

Illinois REALTORS® have joined their colleagues throughout the country urging policymakers to consider the value of these provisions and others which encourage homeownership and real estate investment.

KIFAR members share flood insurance concerns with U.S. Rep. Kinzinger in Watseka

Kinzinger

Neaves

U.S. Rep. Adam Kinzinger (16th Congressional District) provided updates on legislative issues like flood insurance, tax reform and housing and answered questions from 15 members of the Kankakee-Iroquois-Ford-Association of REALTORS® (KIFAR) Wednesday in Watseka.

Federal Political Coordinator Ed Neaves led the discussion, which also covered developments with the Federal Housing Administration, Fannie Mae and Freddie Mac. Neaves and his fellow REALTORS® emphasized the importance of extending national flood insurance past the Sept. 30 expiration date, since Watseka is in a flood plain and the National Association of REALTORS® estimates that 40,000 real estate transactions could be affected.

Kinzinger is in his fourth term in the U.S. House of Representatives and his district covers 14 counties in northern Illinois.

Why homeowners, REALTORS® should be concerned about proposed federal tax overhaul

Source: Bigstock

The Trump administration released on Wednesday its initial sketch of what tax reform might look like.

Two specific areas to pay attention to as the debate develops would be the Mortgage Interest Deduction’s continued viability as a way to incentivize homeownership and a provision that would eliminate state and local tax deductions.

  • According to the Wall Street Journalthe tax package as outlined by the administration on Wednesday, would essentially double the standard deduction to about $24,000.

That means itemizing deductions including the Mortgage Interest Deduction would be less enticing or useful for those filing. That’s an issue since having the MID at full impact is an incentive to get people to buy homes. And homeownership, in addition to being economic bedrock, also serves to stabilize communities and gives families a shot at wealth creation.

By one measure, the average itemized deduction is about $26,000, so it’s not hard to see why doubling the standard deduction to $24,000 could make itemizing obsolete in many cases.

  • Also troubling is a move to eliminate local and state tax deductions.

Illinois reportedly has the highest property taxes in the state, and with an as-yet unsettled budget situation, it’s possible these taxes might increase over time. If the deduction for state and local taxes vaporizes, that means Illinois taxpayers will take a greater hit than states with lower taxes.

Illinois has a 3.75 individual state income tax rate, having decreased from 5 percent a few years ago. Neighboring Indiana has a 3.33 percent tax rate.

According to a CoreLogic study in 2016 the state had a 2.67 percent median property tax rate, versus a 1.31 percent median average for the U.S. as a whole.

Illinois REALTORS® President Doug Carpenter noted that for years REALTORS® have been urged to be vigilant about protecting the Mortgage Interest Deduction. Now is the time for the association’s 44,000-plus members to get involved in making sure policymakers understand how watering down the MID could have serious economic effects.

“As REALTORS®, we see daily the worth that this policy has had for millions of Illinois families who invest in their communities through homeownership,” Carpenter said. “Eroding the value of the MID is bad policy, and won’t serve the best interests of consumers. We should promote tax polices which encourage homeownership rather than make it less attractive.”

NAR President Bill Brown called the proposal is a “non-starter” for the real estate industry and homeowners. (His full statement is here.)

“Major reforms are needed to lower tax rates and simplify the tax code, but that shouldn’t come at the expense of current and prospective homeowners, ” he said.

It’s important to note that this is just the first step in the tax reform debate which is expected to last many months.

Illinois REALTORS® have a chance in less than a month as part of Capitol Hill visits during the REALTOR® Midyear Legislative Meetings and Trade Expo to tell lawmakers in Washington, D.C., to maintain the the MID’s impact.