ShareWhat are you voting for when you go to the polls as a member of the REALTOR® Party? You’re choosing candidates at the federal, state, and local levels who understand the role of real estate and property rights in keeping the economy strong and building vibrant communities. Lawmakers who “get it” will step up on matters affecting your business. Here’s a rundown of key issues on the legislative and regulatory agenda of the National Association of REALTORS®.
Business Issues
Patent trolls
These companies buy and use overly broad patents to try to extract licensing fees from unsuspecting end users of their technology. NAR-backed legislation to curb patent trolls, including those who target real estate companies, has been introduced in the U.S. House and Senate and could be taken up in the new Congress.
Data privacy and security
Data breaches are growing in number and severity, and lawmakers have responded with a variety of legislative proposals in addition to the laws put on the books by states. NAR supports a single federal standard that tries to protect consumers without imposing an unreasonable burden on businesses like real estate brokerages.
Copyright protection
The unauthorized use of digital images taken from websites, known as photo scraping, is a growing problem as the number of listing photos online explodes. Changes to the copyright system will make it easier to register group copyrights and permit nonexclusive licensees to seek remedies for copyright infringement.
Tax Reform
Mortgage interest deduction
Lawmakers and administration officials have drafted proposals to scale back the MID and limit who can claim it. One plan would effectively repeal the MID for the vast majority of home owners. This change could have vast negative implications on home prices and incentives to own versus rent.
State and local property tax deductions
A tax reform plan under discussion would repeal the deduction for state and local taxes paid, including the property tax deduction. This would make it harder for home owners to itemize deductions, reducing the incentive to own a home.
Capital gains exclusion on sale of a principal residence
No capital gains tax applies to proceeds from the sale of a principal residence, up to $500,000 for a married couple and $250,000 for an individual. NAR wants to ensure the incentive stays in the tax code and have it indexed for inflation.
Capital gains carried interest
Carried interest, investment income for the general partner in an investment partnership who might not have equity in the asset, is being scrutinized. Lawmakers have drafted proposals to tax carried interest as ordinary income rather than as a capital gain, a change that would make real estate investment less attractive.
1031 like-kind exchanges
Lawmakers have begun discussing eliminating or curtailing the deferral of tax liability when owners exchange a commercial or investment property for another one of similar value. These tax-deferred like-kind exchanges are being targeted under tax reform proposals of both parties.
State and local transfer taxes About two-thirds of states impose a transfer tax on real estate sales, typically a percentage of the price. Arizona, Louisiana, Missouri, Montana, and others have approved constitutional amendments to ban the taxes. In other states, REALTORS® are working to get them banned, removed, or pared back.
Mortgage Financing
GSE reform
Lawmakers have written legislation to reduce the risk to taxpayers from the two secondary mortgage market makers, Fannie Mae and Freddie Mac. NAR’s position is that the companies should be turned into non-shareholder–owned public entities subject to tight controls. The goal is to ensure uninterrupted availability of mortgage financing in good markets and bad, while a path is cleared for the return of private sources of mortgage capital to the market.
Flood insurance
Lawmakers will be looking at federal flood insurance in 2017 because the federal government’s program for making federally backed flood insurance available to home owners will be up for reauthorization. NAR supports long-term reauthorization of the program and improved flood mapping, streamlined federal assistance for home owners who want to move to higher ground, and program changes that encourage private insurers to offer competitive lines of insurance to home owners.
Student loan debt
Lawmakers have introduced legislation, backed by NAR, to address mounting student loan debt and its effect on home ownership. The proposals would allow borrowers to refinance their federally backed student loan debt. NAR also wants to ensure mortgage underwriting standards don’t unduly punish borrowers who are burdened with student loans. In addition, better education for borrowers about loan terms and payback rules will benefit students at the time they’re applying.