Warning: The content below is inherently dry but extremely important. My intent is not to draw in political parties, denigrate any person or party; only to discuss numbers, incentives, and the proposed new tax policy coming our way.
I write this because as a Realtor® member it would be neglectful to not address the coming tax code changes and how they will impact the Massachusetts homeowner. We are facing a tidal change in America’s tax policy, and with one of the strongest housing markets in the nation, Massachusetts stands to lose quite a lot with the upcoming policy.
A Realtors duty is not only to guide consumers throughout their housing purchases and sales, but also to act consultatively as good counsel in questions of home improvements and to align the homeowner or buying public with the proper parties to aide them. It is also our duty to act against any policy that will negatively impact the homeowner, and consequently the American public. We do this through the National Association of Realtors and RPAC, of which I am a strong contributor. RPAC is the Realtor Political Action Committee and is essentially our lobby. I’ll be forthright in telling you that, while many of us today detest lobbyists and in the acrimony of national politic we tend to group all things together better or worse, there are plenty of lobbying groups acting in good-will. Since 1969 RPAC has been, through voluntary Realtor® contributions, defending the American Dream, owning a home. The countless benefits tied to homeownership come under siege every couple of decades, on a grand and national scale; we have up to this point been successful in beating back those who would seek to undo the greatest instrument for American prosperity.
I’m going to cut right to the chase here and be blunt. This tax policy doesn’t benefit homeowners… and it is downright terrible economic policy for middle-class homeowners. If enacted as it stands and both the mortgage interest and real estate tax deductions are eliminated then Massachusetts housing values stand to drop between $32,970 and $49,450 for the typical homeowner. This is a decline in housing values of roughly 9% to 14%. As of 2016 census data there are nearly 1.6 million homeowners in Massachusetts. Of that pool nearly 70% have mortgages of varying sizes. Nearly a third of the homes with mortgages had a value of over $500,000 and 8.4% paid over $10,000 annually for property taxes. Homeownership and strong values are good for our economy in a multitude of ways, frankly too many to list here in this short column.
Now, some fiscal-reformers may argue that this policy is meant to rein in redundancy in some folks taking multiple deductions for vacation properties, thus costing us taxpayers vast sums of our hard-earned money. Really? Simply put, no! Vacation homes only account for about 4.4% of housing stock in Massachusetts. Even with their higher values due to our gorgeous national seashore, the values don’t even come close to outweighing the good done by tax policy that incentivizes homeownership and strengthens home values.
Good governance, and proper fiscal policy dictate that the tax code for homeowners must remain unchanged otherwise we stand to lose important economic gains, revenue for our schools, parks and museums, and all of the benefits homeownership affords those pursuing the American Dream. To take action, please visit: http://homeownershipmatters.realtor/taxreform/
As this affects all of us, I encourage comments and positive dialogue below.