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As both the House and Senate sharpen their vision for tax reform, REALTORS® want to ensure homeownership is protected throughout the tax reform debate.

“We are watching closely for changes to current law that might leave middle-class homeowners – and homeownership broadly – in a worse place than it is today,” said National Association of REALTORS® (NAR) President Elizabeth Mendenhall. “A near doubling of the standard deduction, combined with the elimination of other deductions, like the state and local tax deduction, can turn the American dream into a nightmare for families, as the rug is pulled out from under them. Simply preserving the mortgage interest deduction in name only isn’t enough to protect homeownership.” Now that both the House and Senate have passed their own versions of The Tax Cut and Jobs Act, a Conference Committee will address the differences between both bills and come up with a final version of a tax reform bill. It could happen anytime next week, as their goal is to vote on the bill by the end of the week.

NAR is asking Congress to support the following provisions for inclusion in the final legislation:
Mortgage Interest Deduction: Retain current law to maintain a total cap of $1 million on primary first and second homes.

Capital Gains Exemption: Retain current law of exempting gains of up to $250,000 for single filers and $500,000 for joint filers for primary residence lived in for two of the past five years of ownership.

State and Local Tax Deductibility: The limitation of deductibility to property taxes should be expanded to include state and local income taxes and the cap should be increased and indexed to inflation These provisions would add needed protection to current and future homeowners and strengthen the ability of qualified American families to purchase a home.

Denise Welsh, president of the Silicon Valley Association of REALTORS®, emphasized it is important to keep homeownership intact for everyone who wishes to purchase a home. “Let’s not let tax reform quash the American dream of homeownership. While the bill reduces taxes on average in every income group, we have grave concerns that with the elimination of the state and local tax deductions and limiting property tax deductions, millions would still see their taxes go up and home values would drop,” said Welsh.


For over 100 years Congress has incentivized homeownership through the mortgage interest deduction and by protecting taxpayers from double taxation. The proposals put forward by both Houses of Congress would roll back these two cornerstones of the tax code and would, instead, become a tax increase for middle-class homeowners.

The mortgage interest deduction and the state and local tax deduction are incentives that are critical for a strong housing market that creates jobs and builds stable communities. Keeping the MID, but eliminating or limiting deductions for state and local taxes, including property taxes, nullifies the incentive to purchase a home, would bring down home values and hurt the American dream of homeownership,

Congress needs to protect taxpayers from double taxation by maintaining the deduction for state and local taxes, including property taxes. Not allowing the average homeowner in California to deduct their property, state and local taxes would effectively raise their taxes and allow the federal government to tax families on money already paid to the state and local governments!

If you haven’t contacted your member of Congress, please TAKE ACTION NOW

The 25 top brokers around the country, including Silicon Valley, have done exactly that in their Letter to the House Leadership yesterday.

TAKE ACTION HERE and tell Congress – Do not raise taxes on middle class homeowners in order to cut taxes for corporations!


The National Association of REALTORS® (NAR) is asking members for help in urging members of Congress to reform the tax code AND protect middle class homeowners.

The current tax reform proposal from Washington, D.C. will become a tax increase for middle class homeowners because the plan threatens homeownership tax incentives, like the mortgage interest deduction and the state and local property tax deduction. These incentives are critical for a strong housing market that creates jobs and builds stable communities. Home-owning families with incomes from $50,000 to $200,000 could face average tax hikes of $815 in the year after enactment.

Take action now and tell Congress – Do not raise taxes on middle class homeowners in order to cut taxes for corporations!


Members of the Silicon Valley Association of REALTORS® (SILVAR) were in Washington, D.C. this week attending the National Association of REALTORS®’ (NAR) REALTOR® Party Convention & Trade Expo, with nearly 8,500 other REALTORS® from across the country, advocating policies that impact the residential and commercial real estate markets. REALTORS® met with legislators, congressional and regulatory staff, as well as top industry executives.

This year’s convention focused on critical real estate issues such as preserving the mission and accessibility of the Federal Housing Administration’s loan programs, protecting real estate-related tax policies, and reforming the secondary mortgage market.

“This week is important, not only because REALTORS® want to ensure their points-of-view on important real estate issues are heard, but also to remind our country’s leaders of the vital role that real estate plays in both the long- and short-term health of this nation,” said NAR President Steve Brown.

SILVAR members attended U.S. Senator Dianne Feinstein’s weekly constituent breakfast and met with staff of U.S. Representatives Anna Eshoo, Jackie Speier and Mike Honda. During meetings on Capitol Hill, SILVAR REALTORS® urged support for legislation to reinstate the Mortgage Forgiveness Debt Relief Act, which expired at the end of 2013; preservation of the mortgage interest deduction and the property tax deduction; and not to pass legislation that will weaken and ultimately eliminate Fannie Mae, Freddie Mac, and FHA.

SILVAR members also participated in a number of NAR meetings. David Barca, California Association of REALTORS® Federal Committee chair, briefed California NAR Directors on legislative issues. SILVAR Executive Officer Paul Cardus shared information on SILVAR’s global program with other REALTOR® associations at the State and Local Forum on Global Business.

Members of the Silicon Valley Association of REALTORS®, Santa Clara County Association of REALTORS® and San Mateo County Association of REALTORS® met with U.S. Representative Anna Eshoo.

Members of the Silicon Valley Association of REALTORS®, Santa Clara County Association of REALTORS® and San Mateo County Association of REALTORS® met with U.S. Representative Anna Eshoo.

Six SILVAR members participated in meetings on Capitol Hill as part of the National Association of REALTORS® (NAR) Midyear Legislative Meetings on May 13-18. They included SILVAR President Carolyn Miller, President-elect David Tonna, Past President Suzanne Yost, Federal Political Coordinator Carole Feldstein, PAC Chair Barb Williams, and NAR Director John Tripp. They met with Anna Eshoo, U.S. Representative for California’s 18th congressional district, which includes parts of San Mateo, Santa Clara and Santa Cruz counties; Jackie Speier, U.S. Representative for California’s 14th congressional district, which consists of portions of San Mateo County and San Francisco; and Mike Honda, U.S. Representative for California’s 17th congressional district, which includes portions of the East Bay, western San Jose and Silicon Valley.

Members asked their representatives in Congress to:

1. Restructure Fannie Mae & Freddie Mac and Encourage the Return of Private Capital. Members requested that the chairmen of the House Financial Services Committee and the Senate Banking Committee hold hearings that focus on restructuring the secondary mortgage market, and that the emphasis of these hearings be the crafting of comprehensive bipartisan legislation that resolves the conservatorship of Fannie Mae and Freddie Mac. They stressed an efficient and adequately regulated secondary market is essential to providing affordable mortgages to consumers; that the federal government must clearly, and explicitly, offer a guarantee of some mortgage instruments; and that the government’s guarantee should ensure a wide range of safe, reliable mortgage products for creditworthy consumers.

2. Preserve homeownership tax policies. As Congress considers proposals to reform the federal tax code, SILVAR REALTORS® said lawmakers should consider the vital role that real estate tax provisions play in the nation’s housing markets and economy, as well as the financial well-being of Americans and their families. As real estate markets continue to recover, Congress must first do no harm to the following:

• Mortgage Interest Deduction: Oppose efforts to change or eliminate the mortgage interest deduction for primary and second homes.

• Property Tax Deduction: Property taxes paid are properly not considered “income” that should be subject to federal income tax. Congress should not tax “income” that doesn’t exist and oppose elimination of the deduction for property taxes.

• Capital Gains Exclusion for Sale of Principal Residence: Individuals can exclude the first $250,000 (and married couples the first $500,000) of gain from the sale of their principal residence from capital gains tax. This provision allows homeowners to build equity and save for retirement and should be maintained.

3. Preserve the Mission and Purpose of the FHA Program. SILVAR REALTORS® asked their representatives to ensure that the Federal Housing Administration (FHA) single-family
program has the tools and policies in place to meet its mission of access to safe, affordable mortgage financing to qualified borrowers nationwide. They said FHA’s single-family mortgage insurance program helps preserve private financing options for homebuyers regardless of local, regional or national economic conditions. They asked that the legislators continue support for H.R. 1145 (Waters (D-CA), Capuano (D-MA)), which provides FHA with the flexibility to make necessary changes to the program, provides taxpayer protections against lenders who make errors of material fact, and improves program oversight. They asked that Congress provide FHA with tools, but also protect FHA from any further restrictive requirements that keep more people out of the program.

The Silicon Valley Association of REALTORS® (SILVAR) hailed a rebuttal by the California Association of REALTORS® (C.A.R.) to an opinion editorial piece advocating the elimination of the mortgage interest deduction (MID).

“We are happy that California Association of REALTORS® President Don Faught was able to put the facts out there about the importance of the mortgage interest deduction to all homeowners, especially low- and middle-class families,” said SILVAR President Carolyn Miller.

Doyle McManus, a columnist with the Los Angeles Times, recently wrote an opinion editorial advocating the elimination of the MID. C.A.R. President Don Faught submitted a letter to the editor refuting the op-ed piece, questioning supporting a tax measure that would put a burden on lower- and middle-class families that can least afford it.

In his letter, Faught explained if the MID is eliminated, it would cost the average California taxpayer $3,940 annually, a substantial amount for those who need it the most. In California, 59 percent of taxpayers who claimed this deduction in 2010 earned less than $100,000 a year. The amount is considered not high income in California because home prices are among the highest in the nation.

“Eliminating the deduction would mean fewer home sales, not to mention a drop in other purchases that typically accompany a home sale such as furniture and other retail purchases. Already struggling local governments would see tax revenues fall, and since housing is widely regarded as a key economic driver, our country could be driven back to recession,” wrote Faught.

The MID allows an individual to deduct mortgage interest paid on mortgage debt of up to $1 million. The ability to deduct the interest paid on a mortgage can translate into significant savings at tax time.

Faught referred to a recent C.A.R. survey that found nearly eight in 10 home buyers said the mortgage interest and property tax deductions were “extremely important” in their decision to purchase a home. A Pew Research Center study last year also found 80 percent of Americans believe buying a home is the best long-term investment they can make.

“After all, renting is not the American Dream; homeownership is. For many, the mortgage interest deduction can mean the difference between attaining that dream or not,” Faught’s letter concluded.

Miller said REALTORS® will continue to defend the MID. “The mortgage interest deduction is not a loophole. It is a fundamental building block of equity for homeowners. For aspiring homeowners who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the mortgage interest deduction help them begin building their future through homeownership,” said Miller.

See LA Times Op-Ed

REALTORS® want to ensure the nation’s 75 million homeowners continue to receive the mortgage interest deduction as it is today. It’s a very important benefit for all homeowners, especially the middle class homeowners. On Wednesday, the California Association of REALTORS® placed an open letter advertisement in California’s six largest daily newspapers, calling on President Obama and Congress to preserve the mortgage interest deduction in its entirety during their “fiscal cliff” discussions.

The letter was placed in a full-page ad in the Los Angeles Times, San Francisco Chronicle, San Jose Mercury News, Sacramento Bee, U-T San Diego, and the Orange County Register, and states any proposal that eliminates or attempts to alter in any way the mortgage interest deduction undermines a century-old commitment to the American Dream of homeownership.

The letter also asks the public to visit to learn how they can contact their Member of Congress and ask them to protect the mortgage interest deduction. View the open letter.

The Silicon Valley Association of REALTORS® is asking the public to call their Member of Congress directly and urge them to preserve the mortgage interest deduction (MID).

Congress, as part of negotiations on avoiding the “fiscal cliff,” has made direct references to “closing loopholes” and “limiting deductions” as a way to raise revenues. Clearly, the MID is high on this list of revenue raisers. Losing the MID will disproportionately affect the middle class because a larger proportion of the middle class takes the deduction.

The MID benefits primarily middle- and lower-income families. According to the IRS, more than 70 percent of the mortgage interest payments claimed as deductions is on returns filed by people with incomes between $60,000 to $200,000. Only about 1.4 percent of the total is claimed by taxpayers earning $1 million or more.

In California, 89 percent of those who took the MID earned less than $200,000. Losing the deduction would cost the average California taxpayer over $3,900.

Congress may decide to reduce or limit the MID at any time, which is why it is vital that you call your Member of Congress TODAY and ask that they preserve the mortgage interest deduction. Limiting the MID impacts ALL homeowners, not just those who take the deduction, by decreasing the value of all housing. The MID facilitates homeownership by reducing the carrying costs of owning a home. This makes a real difference to hardworking families. Homeowners already pay 80 to 90 percent of U.S. federal income tax, and this share could rise to 95 percent if the MID is eliminated.

REALTORS® urge all homeowners, including family, friends, colleagues and clients to get involved by calling Congress and ask that the MID be preserved. The public may reach Congress by calling 202-224-3121 Monday-Friday, from 9 a.m. – 6 p.m., Eastern time. The Capitol switchboard operator will help callers identify their member of Congress and connect them.

The fiscal 2013 budget proposal President Barack Obama released this week includes proposals to trim the mortgage interest deduction (MID) and other itemized deductions for wealthier households. As in the previous three years, the proposal is expected to attract little support in Congress.

The proposed budget would reduce the value of itemized deductions to 28 percent for married couples with incomes over $250,000 and individuals with income over $200,000. Currently, depending on the tax bracket these households are in, the value of their deductions could be as high as 33 or 35 percent.

The proposal has never attracted sufficient support from either party, and National Association of REALTORS® President Moe Veissi in a statement yesterday said NAR would strongly oppose this or any proposal that would limit MID and other itemized deductions.

“The mortgage interest deduction is vital to the stability of the American housing market and economy,” Veissi said. “We urge the president and Congress to do no harm” to today’s fragile economic recovery. “The nation’s homeowners already pay 80 to 90 percent of U.S. federal income taxes. Raising taxes on them, now or in the future, could critically erode home values at all price levels.”

The budget request also includes a previously rejected proposal to tax the carried interest of general partners in investment partnerships, including real estate partnerships, as ordinary income rather than as capital gains, which is taxed at 15 percent. If taxed as ordinary income, it could be taxed at a higher rate, depending on the taxpayer’s tax bracket.

Analysts have said that this provision is mainly aimed at general partners of hedge funds, but general partners in real estate partnerships could get caught in it unintentionally. NAR in the past has opposed the tax change.

Overall, the budget request, which is just the opening step in a long process in which Congress will develop a budget for passage, envisions fiscal year 2013 spending of about $3.8 trillion. Of that amount, several hundred billion would be new spending for infrastructure, research and development, and other priorities of the administration. The budget envisions cutting about half a trillion dollars from the defense budget, and another roughly half a trillion dollars through tax law changes, including the NAR-opposed curbs to the value of MID for upper-income households. More savings would come from allowing tax cuts enacted during President George W. Bush’s administration to expire for all households, except those earning less than $250,000.

In all, the administration is saying it would cut the deficit by about $3 trillion over 10 years, plus another trillion dollars from legislation Congress passed in August of last year as part of the budget deal to raise the debt ceiling cap.



This week REALTORS® from across the nation convened in our nation’s capitol for the National Association of REALTORS® Mid-year Business meetings and visits with members of Congress. SILVAR members joined their fellow REALTORS® in Washington, D.C. to take part in NAR business meetings and personally meet with their representatives in Congress.

Along with members from the San Mateo, Santa Clara, Santa Cruz County Associations of REALTORS®, SILVAR members met with both U.S. Representatives Anna Eshoo and Mike Honda during the meetings. The SILVAR delegation included SILVAR President Gene Lentz, President-elect Suzanne Yost, Region 13 Caucus Chair Jim Hamilton, NAR Directors David Barca, Jeff Barnett, Judy Ellis, Susan Tilling, C.A.R. Directors John Tripp, Aaron Wheeler, and Federal Political Coordinator and SILVAR PAC Trustee Carole Feldstein. 

In meetings with members of Congress, REALTORS® focused on five core issues important to homeowners and the housing industry. Below are the issues that were brought to the attention of our legislators.

The Future of the Secondary Mortgage Market
The GSEs, though they have been in conservatorship for almost three years, remain critical to ensuring mortgage market liquidity. Currently, estimates of GSE loan volume range as high as two-thirds of mortgage loans. There is currently a push in Congress to eliminate the GSEs. Without a viable replacement for their secondary mortgage market mission, it will mean severely restricted mortgage capital and higher costs for qualified, creditworthy borrowers. The reduction in mortgage liquidity will exacerbate downward pressure on home prices ultimately reducing the home values for existing homeowners.

REALTORS® urged that the federal government must have a continued key role in the secondary mortgage market in order to ensure that there is capital for mortgage lending in all mortgage markets under all market conditions. California’s jumbo market over the last four years has demonstrated that a purely private market is incapable of meeting all the needs of home buyers and supplying a stable flow of capital. Reform of the secondary mortgage market, in particular Fannie Mae and Freddie Mac, should be comprehensive and undertaken methodically.

Access to Affordable Mortgage Products
The current loan limits for high-cost areas are set to expire on September 30, 2011. Reverting to the statutory limits will create a decline in liquidity and hurt our nation’s economic recovery. Many argue that the loan limit increases help only higher cost areas, but this is not the case. Reverting to the statutory limits will reduce limits in 619 counties and 41 states and the District of Columbia. The average decline in loan limits will be more than $58,000.

The Dodd-Frank Act requires mortgage securitizers to retain 5 percent of the risk unless the mortgage is a qualified residential mortgage (QRM). The proposed rule issued by six federal regulators would require families to make a 20 percent down payment and meet other stringent requirements. The QRM definition is extraordinarily important because it will determine the types of mortgages that will generally be available for borrowers for the foreseeable future. Weak underwriting and toxic mortgages are the main cause of mortgage defaults, not well-underwritten mortgages with affordable down payments.

REALTORS® urged their members of Congress to oppose any decrease to FHA and GSE loan limits. Maintaining the conforming loan limit calculation and caps in high-cost areas would allow the local economic climate of each high-cost state to dictate the necessity of an increase in its conforming loan limit. Maintaining the current conforming loan limits in high-cost areas would also give everyone equal access to the secondary market.

REALTORS® also asked that members of Congress submit comments to the six regulators during the comment period and voice concern that the proposed Qualified Residential Mortgage (QRM) rule would deny otherwise creditworthy Americans affordable financing while further concentrating the lending industry in the mega-banks that are already “too big to fail.”

Preserving Home Ownership Tax Benefits
In December 2010, the President’s National Commission on Fiscal Responsibility and Reform (best known as the Deficit Commission) issued a report identifying tax and spending changes designed to significantly reduce the deficit over the next decade. That Commission recommended different tax options. At least three different approaches were included:

  • Eliminate all “tax expenditures” (deductions, exclusions, credits).
  • Eliminate the mortgage interest deduction (MID) for second homes and reduce the amount of allowable mortgage debt from $1 million to $500,000.
  • Convert the deduction to a 12 percent tax credit.

Since the report was issued, REALTORS® have aggressively reminded Congress that any change to the tax rules that apply to home ownership would disrupt the market and cause home values to further decline. Both Rep. Eshoo and Rep. Honda were thanked for co-sponsoring H.Res. 25, which supports the existing the mortgage interest deduction.

REALTORS® expressed any change to the MID or other home ownership provisions will slow the housing recovery. Tax rates have a way of creeping up over time. Since 1986, when the rate was 28 percent, the top rate has been as high as 39.6 percent and is presently 35 percent. Reducing, eliminating or otherwise changing the value of the mortgage interest deduction will cause the value of housing to drop even more, perhaps by as much as 15 percent in some markets. This decline would be in addition to the 30 percent decline that some markets have experienced.

Short Sales
Too often, short sales are still a story of delay and unrealistic lender views of current home values, resulting in the potential buyer canceling the contract and the property going into foreclosure. Even if successful, the process usually takes many months and countless hours and often requires re-marketing because buyers lose patience and terminate the contract. Streamlining short sales will reduce the amount of time it takes to sell the property, improve the likelihood the transaction will close, and reduce the number of foreclosures. This will benefit lenders, sellers, buyers, and communities.

REALTORS® support H.R. 1498 to require servicers to decide whether to approve a short sale within 45 days of completion of the short sale request. A hearing on H.R.1498 will shine a light on the short sales issue and identify ways to make short sales work better. Delays in approving requests for a short sale remain a significant impediment to this foreclosure avoidance option. Banks are losing more than they have to because they lose much more when selling homes after foreclosure than they would if they approved reasonable short sales.

Affordable and Available Property Insurance
Floods claimed more lives and property than any other natural disaster in the U.S. over the last century. Unable to ignore the rising cost to taxpayers of disaster payments for uninsured properties or the lack of a private market for flood insurance, Congress created the NFIP in 1968. Today, 5.6 million property owners rely on the program in 21,000 communities where flood insurance is required for federally related mortgages. Since September 2008, Congress has approved nine NFIP extensions and allowed five lapses. During the June 2010 lapse, 47,000 home sales were delayed or cancelled, according to NAR survey data. Real estate markets require certainty to make the long-term investments that are vital to the U.S. economic recovery.

REALTORS® urged Congress to reauthorize the National Flood Insurance Program (NFIP) for at least five years and end the uncertainty of extensions and shutdowns. NAR supports provisions of H.R.1300 (Biggert, R-IL) to reauthorize NFIP through 2016 but oppose its privatization pilot program which would reduce the program’s risk pool and long-term viability. NAR opposed H.R. 435 (Miller, R-MI) to sunset the NFIP by 2013 and authorize interstate compacts.

March 2023


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