Tax Reform: Do No Harm To Home Ownership

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There’s been quite a ruckus over President Trump’s first few months in Office as he begins to forge his path as America’s forty-fifth president. He has already ruffled a few feathers and caused strong opposition from different fronts as he set to work “making America great again.” With such uncertainty many are wondering just what changes will occur and how they will affect American lives. This uncertainty also reaches into the real estate industry. With much talk about the elimination of the mortgage interest deduction in the months prior to Trump’s first days in the Oval Office, many are wondering what other changes will likely affect real estate, housing inventory and lending practices.

Most would agree that Trump is a wild card as there has not been another president like him in the past. Without a comparison to get a base-line on our new leader, many are scrambling for solid ground as “what-if” stories are circulating through the media. Truly a man of and to himself, he has a different outlook on how he will run America. Just because things are going to be different doesn’t necessarily mean things will be negative or for the worst. Everyone will have their own opinions and each rightly owns their opinions. But we’ll stick to the facts and take a look at what could be in store for American real estate and the potential effects on the market.

Trump is a real estate mogul and understands the benefits of real estate as an investment. Some say because of this he will continue to be a friend to the real estate industry. And it is no surprise that Trump is a supporter of fewer business regulations. Fewer business regulations would allow lending companies more flexibility in negotiating with underwriters and allow non-traditional lenders to enter the lending field. Small-sized banks typically fund construction and land development. Decreasing compliancy cost for small banks means more loans will be processed and spur the housing market creating more inventory, which has been lower than usual. Also, less regulatory land-use and zoning burdens for construction would lower the cost of building and developing. With more money to build more will be built.

With much talk and speculation about the tax changes bound to be implemented, Trump is looking for the most advantageous tax structure that could possibly prompt holding companies to sell investment real estate. As the mortgage interest deduction, property tax deduction, and exemptions on capital gains from home sales are all looking at some form of tax reform. Realtors are holding strong to the belief those are not to be “harmed” or altered in any way. We, as an industry, will continue to educate our elected officials as to the importance of home ownership and its intrinsic benefits to the individual homeowner and the community as a whole. Real Estate will always be a good investment and the broad benefits it provides to families and communities are too important not to protect!

 

*Silverhawk Realty (Treasure Valley and Western Treasure Valley Real Estate) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.