The Tax Cuts and Jobs Act: What Realtors® think

Georgia R. Richardson | Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act, H.R. 1, has the potential to erode the financial power of homeowners

The National Association of Realtors® (NAR) is the largest trade organization in the U.S. dedicated to advocating for the residential and commercial real estate industries. NAR opposes the new Tax Cuts and Jobs Act because, “…this bill will diminish the opportunity for homeownership for millions of middle-class families.” NAR has issued a call for action, asking members to contact their congressional representatives, voice opposition to this bill, and warn about how it threatens the real estate industry.

Rather than read the entire bill, save time by reviewing the section-by-section summary on the Ways and Means Committee website HERE. Once you have read the summary, please reach out to the legislator for your district to express your concerns about this bill, and its impact on homeownership among middle class Americans. If you are a REALTOR®, REALTIST® or work in the U.S. real estate industry in any capacity, speak out, and hold your lawmakers accountable for decisions that could have major impacts on homeownership, and the real estate profession.

Industry impacts

One impact on the real estate industry will be the bill’s affect on a home seller’s equity and retirement goals. For many homeowners, real estate property is their single most important and valuable asset, making up the majority of their net worth. For current and future homeowners, the major concern is the threat of removing tax deductions on home mortgage loans. The congressional tax reform proposal could erode the fundamental dream of homeownership in California and other states where Median Home Prices and loan amounts exceed the $500,000 allowable deduction on new mortgage debt.

Without the mortgage deduction incentive, many people will choose renting versus buying. While renting is a viable option, it’s homeownership that builds long term wealth for most Americans.

Increasing taxes

To quote Iona Harrison, chair of NAR’s Federal Taxation Committee, who has testified on behalf of NAR on Capitol Hill regarding tax reform and homeownership, “…an analysis by the committee showed that under the GOP tax proposal, homeowner households with $50,000 to $200,000 in annual income would pay $815 more in taxes per year,” says Harrison. “Coupled with the proposed elimination of other itemized deductions, the tax plan could spur a housing downturn if enacted.”

“The bottom line is removing tax incentives means fewer home buyers and lower home values.”

Will The Tax Cuts and Jobs Act really make homeowning unaffordable?

One of the points of view I’ve read contrary to the NAR argument is an article on Forbes.com by Jeff Dorfman, a professor of economics at The University of Georgia:

“Housing is not being made unaffordable by the proposed tax reform since the vast majority of Americans will receive a moderate tax cut under the plan. Home builders and realtors seem concerned that a few rich Americans might not buy as expensive houses without as big a tax break, even though they will have more disposable income. I think they are wrong. Americans, particularly higher-income ones, like to buy stuff, especially expensive stuff, and will likely continue to buy expensive houses. If there is some adjustment in home buying demand on the higher end, high-end home builders can build more homes that are slightly less expensive. The world is not ending.”

Get educated, and make your opinion known

I implore you to do your due diligence regarding this bill and step up to protect California homeownership rights. Even someone who is not yet a homeowner should be concerned about the loss of financial benefits to homeownership, and the about the effect on business enterprise interest.

Perhaps in other states, where median home prices are much lower, this reform might make sense. But, by no means are Californians who can afford loans of $500K or more, considered rich! This will have deep impacts on the middle/working class in California.

Be informed, do your homework, and act now by expressing to your member of Congress what you think of this bill, and it’s impact on Californians.

Discussing senior living and care options, preparing documents important

Georgia W. Richardson | senior living and care
Photo: U.S. Air Force/Airman 1st Class Rachel Loftis

As the Baby Boomer generation ages, there are decisions to be made before a health crisis or death impacts the family; reviewing senior living and care options important

Too often I’ve seen children and parents reluctant to talk about the inevitable… we all transition from this life, one day. If you’re unprepared, handling family matters could lead to chaos! I’ve seen disagreements over arrangements and business matters, drive family members to never speak again.

As the Baby Boomer generation ages, decisions should be made before a health crisis impacts your family.

Avoiding Benefits-Paid Liens and Forced Sales

One very important consideration for real estate owners:  Being forced to sell property to settle healthcare-related expenses and benefits.

Often, when insurance runs out after illness strikes, the real property of the sick person is liquidated and applied to debts. And, under Medicaid law, after a Medicaid recipient dies, a state must try and recover from the estate any long-term care benefits paid, such as nursing home costs.

When faced with potential long-term, catastrophic illness of a senior, families should explore taking all property out of the senior’s name, or, establish a trust to hold the property, and protect it from potential forced sales and liens.

You can read more about this issue HERE.

The process of protecting assets from being liquidated is complex. There is a small window prior to a death that the transfer of property must happen, in order to be valid protection. If my experience in helping people navigate these waters could be useful to you, please feel free to reach out.

Handling paperwork: Hope for best, prepare for worst

A will is a legal document used to dispose of personal property at death. Wills can also name people to do important jobs, such as allocating personal representatives or executor of one’s estate.

Preparation of documents like a will, living trust, advance health directive, power of attorney, burial arrangements, insurance policy terms and conditions, etc. should be discussed openly between loved ones — or at least with the family member named or appointed executor or trustee of the estate.

Being prepared helps families find it easier to process the loss of loved one. Trying to take care of business matters while dealing with the death of a loved one makes the situation even more emotionally charged and stressful. Make informed decisions that family members agree upon — now. Death and tragedy are part of life. Loved ones should prepare and leave clear directions for how they want things carried out when tragedy strikes.

Make informed decisions on senior living and care

An important tool in making those conversations easier can be found on the internet.

A great source for senior living and care options is only a click away! When I was actively listing and selling homes, one of the publications that I offered to my clients and geographic market area (sellers) was “New LifeStyles,” a publication with wealth of information and answers to many questions you may have about senior living and care options. Today, the information is even easier to access online at www.newlifestyles.com. You’ll find information and listings of various senior living and care options including the following categories, then this is your one-stop-information portal.

Examples of the info found there include:

  • Independent Living –Communities where seniors live independently in their own home/unit.
  • Assisted Living – A combination of housing, personalized supportive services and health care
  • Care Homes – Usually single family homes licensed to provide assistance with medications, bathing, & dressing.
  • Respite Care – Temporary care available for short-term stays or specified hours.
  • Memory Care – Communities offering specialized programs for residents suffering from Alzheimer’s disease or other forms of memory loss and dementia.
  • Nursing Homes – Communities licensed to provide health care and services involved in managing complex and potentially serious medical problems.
  • Home Care – Includes providers of licensed health care services in the home, hospital, or residential homes, and companies that provide non-medical assistance.
  • Hospice Care – Provided in the home or a senior care community. Services can include pain management and a variety of emotional, spiritual and physical support.
  • Continuing Care Retirement Communities – A CCRC combines independent living, assisted living, nursing and sometimes memory care in a single setting.
  • Products & Services – Financial, health-related and other valuable products and services designed to meet the varying needs of mature adults.
Georgia W. Richardson | Guide to Senior Living & Care
The Guide to Senior Living and Care. Photo: New LifeStyles.

Presenting your loved ones with a hard copy of the Guide to Senior Living and Care or directing them to this website is a great way to introduce the subject. Review the info at your leisure, with no pressure to take immediate action. The guide provides useful information that will help you prepare for making tough decisions BEFORE the time comes. The publication is well-organized, and provides a wealth of resources including senior programs and services, both public and private. There are different publications for different regions so, first identify your coverage area, and order the appropriate guide.

Don’t procrastinate, go online and download or subscribe to this publication today — you’ll be glad you did!