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.