While HBA members were busy
Bringing Housing Home™ during in-district meetings with lawmakers, tax staff at the National Association of Home Builders were on Capitol Hill fighting to protect home ownership tax incentives, including the mortgage interest deduction, in any future tax reform effort.
The
Senate Finance Committee is currently examining tax reform efforts and conducted a roundtable on home ownership tax rules that also included tax staff from industry groups and economists from Washington think tanks and local universities.
During the roundtable, NAHB staff and representatives from the
Mortgage Bankers Association and
National Association of Realtors® provided research and data explaining the history, role and beneficiaries of the mortgage interest and property tax deductions. The mortgage interest deduction is widely claimed by the middle class, providing nearly $70 billion in tax benefits a year to our nation’s home owners. Moreover, the benefits tend to be collected by younger households, who being in the early years of a mortgage, are paying more interest and thus claiming larger deductions.
The roundtable also discussed the capital gain exclusion, an important rule particularly for older home owners looking to relocate, as well the deduction for mortgage insurance (include PMI) and the exclusion for forgiven mortgage debt.
A Trillion-Dollar HitWhile economists from the think tanks made the argument that the housing tax incentives should be transformed, weakened, or perhaps eliminated, our housing experts explained to the Senate staffers the significant economic harm that would come from increasing the cost of home ownership. Citing studies from NAHB's Housing Economics team, academics, and tax think tanks, our team reported that repeal of the mortgage interest deduction would reduce GDP by $100 billion a year, eliminate at least $1 trillion in household net worth, and delay home ownership for younger households.
The Senate Finance Committee also will be holding other tax reform working groups and the collective findings could be used by members to craft a comprehensive tax reform bill later this year.
Many tax analysts believe that the 2015 political environment will not allow for consideration of comprehensive tax reform that includes changes to the individual side of the tax code. However, there is a window in 2015 for debate of business-only tax reform.
Your Home Builders Association has argued that business tax reform must include rate reductions for pass-through entities (S Corporations, LLCs), as well as C corporations. And business tax reform should protect key tax rules that encourage investment and economic growth, such as the Low-Income Housing Tax Credit, business loan interest deductibility, like-kind exchange, and tax accounting rules for home construction contracts.
As the association has been doing during earlier rounds of tax reform discussions, your Home Builders Association will continue to be highly engaged, presenting our research concerning housing and tax policy and the economic benefits of housing, home ownership and residential construction.
