The Central Valley Association of Realtors fear that the Republican tax reform plan could drive down the value of owning a home, and plan to take their grievances to Congressman Jeff Denham’s district office on Tuesday during a protest rally.
“We would like to make sure that homeowners and buyers are not the ones bearing the brunt of this tax reform,” said CVAR Executive Patrick Wallace. “There are several things in it that do just that.”
According to the National Association of Realtors, home values could drop 10 percent if the Senate or House tax reform bill is signed into law, leading the nation away from owning homes and toward renting property.
Wallace said that issues in the GOP plan include the elimination of both state income tax and property tax as deductions, as well as stretching of the capital gains period from two to five years, meaning homeowners will have to live in their houses longer before they can exercise their capital gains benefit. In a housing market that’s already lacking inventory, this could be a huge problem, he said.
“There will be big tax increases for homebuyers and, based on the numbers we’ve looked at, tax decreases for renters. That takes away the incentive for home ownership,” said Wallace. “It sounds kind of cliché, but Realtors deal with the ‘American Dream’ every day. The United States has been promoting home ownership for well over 100 years through tax incentives, and people who have bought property this year or last year and are counting on those incentives are going to be burdened by this.”
High-cost states, like California, will be hit the hardest, Wallace added, because more people itemize and take advantage of the current deductions. While he stated that the rally outside Denham’s office is meant to protect homeowners, he couldn’t help but admit the troubling impact the tax reform could have on local Realtors as well.
“It’s just basic economics,” he said. “If the Realtors don’t have any inventory to sell, then they won’t be selling anything. It could affect Realtors, definitely.”
The rally on Tuesday will feature speakers meant to educate those in attendance who may not be as politically aware as others, Wallace said, though much could happen between now and the scheduled event.
“We’ll be talking about the key points of the reform, but those keep changing,” said Wallace. “Something could happen between now and Tuesday to where we don’t do anything depending on what they negotiate or vote on.”
The Senate voted on and passed their version of the tax bill late Friday night, after GOP leaders spent the day making last-minute changes necessary to satisfy Senators holding out on the plan, and it will now go to conference with the House version of the bill.
Wallace urges Realtors who take issue with the tax reform to join CVAR in rallying at Denham’s office Tuesday, though he says he is remaining positive about the chance for changes.
“CVAR has a longstanding, very good working relationship with Congressman Denham, and he historically has been very pro-real estate and pro-homeownership,” said Wallace. “He’s always very open and very willing to listen and so we want to make sure that he understands how severe this is, and how serious this is for the homeowners not just in the Central Valley, but the entire state.”