Constantly in this newsletter I have bragged about the efforts of the National Association of Realtors (NAR) and the North Carolina Association of Realtors (NCAR) to support home ownership and work toward the betterment of the public’s housing desires. But I have a bone to pick with both of them. Over the last three months of 2017 I was bombarded with emails from both groups opposing the recently passed tax cut legislation. It continued right up until the bill was signed. I was suppose to write or call my congressional delegations to protest the parts of the tax bill that were related to real estate. Even the Wall Street Journal wrote an editorial stating the tax cut bill was bad real estate legislation. Hello WSJ, this bill was not about real estate but it was about stimulating the economy.
Let me make my position clear. Real estate tax issues were just a small part of this legislation. To quote an old campaign slogan “It’s the economy, stupid”. Real estate and the economy had suffered almost a decade of sluggish performance. During this period the GNP never grew more than 1.5% in any one year. Now we are looking at plus 3% annual growth. Multiple billions of overseas investments are pouring back into this country every week and tens of thousands of U S workers are getting pay raises and bonus checks.
NAR was hung up on two issues. One issue was the capping of the personal property tax deduction at $10,000 per year (the other issue was limiting the home mortgage interest deduction to the interest paid on the first $750,000 of a mortgage). Both of these items previously did not have any limits. There were many legislators working on the tax bill that wanted these two deductions eliminated all together. I thought the NAR lobby won the battle early when these rather generous limits were included in the original bills. I felt like pushing for more seemed greedy. Even in high tax area like the Triangle very few folks are above these two deduction limits. Views like the WSJ editorial I mentioned were aimed at folks in New York, New Jersey, New England and California
My beef with NAR and NCAR is very simple. If you want to stimulate real estate, stimulate the economy. The political left in this country always wants to tax the rich more while the political right does not want any restrictions on deductions at all. I thought from a real estate prospective this bill was a great compromise. Isn’t wise compromise generally a good idea.