House Republicans unveiled their tax reform bill today and unfortunately it is even worse than we thought. As NAHB staff continues to analyze the 429-page legislative package, we wanted to quickly provide an overview of the bill to our members.
NAHB believes this plan will ultimately harm home values, act as a tax on middle-class home owners and discourage younger, first-time home buyers from entering the market.
As I reported yesterday, NAHB came out in strong opposition to the plan because it severely marginalized existing housing tax benefits by drastically reducing the number of home owners who can take advantage of mortgage interest and property tax incentives.
The legislation goes a step further by capping mortgage interest at $500,000 for new home purchases. This means that home buyers in expensive markets will effectively see the value of this housing tax incentive further diminished. There is also no mortgage interest deduction for second homes.
The House leadership killed a cost-effective plan proposed by NAHB that House tax-writing committee leaders agreed to include in the bill. It would have provided a robust homeownership tax credit to help up to 37 million additional home owners who do not currently itemize.
In addition to eviscerating the mortgage interest deduction, the Republican tax bill provides generous tax relief to large corporations while small businesses wind up with limited relief.
We need all NAHB members to engage on this issue. Please email your congressman and let them know that this tax reform legislation, as written, is wrong for America. Encourage them to revise the bill to include NAHB’s proposed homeownership tax credit that would benefit the middle class. Visit http://www.capitolconnect.com/builderlink/ to send an email.
Here are other pertinent provisions in the Republican overhaul plan.
12 percent up to $45,000* 12 percent up to $90,000*
25 percent up to $200,000 25 percent up to $260,000
35 percent up to $500,000 35 percent up to $1 million
39.6 percent over $500,000 39.6 percent over $1 million
* Benefits of 12 percent bracket would be phased out at higher incomes.
This tax reform package undermines the nation’s longstanding support for homeownership and threatens to lower the value of the largest asset held by most American families. In short, this tax reform plan lacks any significant homeownership tax benefit and will put millions of home owners at risk.
NAHB will continue to aggressively oppose this tax reform bill and we will keep you apprised of any major developments.