Business

Realtors remain wary of NC tax reform

Posted July 16, 2013

— North Carolina real estate agents aren't thrilled with the tax reform plan that Gov. Pat McCrory could sign into law as early as the end of the week, but they admit it could have been much worse on their industry.

One provision of the legislation caps the state deduction on mortgage interest and property taxes at a combined $20,000. Earlier tax reform bills eliminated the deductions altogether.

"We're very, very worried that this is just the start of a slippery slope, and the ability of homeowners to take those deductions will go away eventually," said Mark Zimmerman, legislative chairman for the North Carolina Association of Realtors.

Who could be affected by the deduction cap depends on various factors, including home value, mortgage interest rate and property tax rate. Zimmerman said, in general, homeowners who owe $300,000 or less on their mortgage will be able to take their full deductions, while those with more expensive homes and mortgages would start losing out on the tax break.

Association President Patrice Willetts said rising interest rates could push a growing number of homeowners into the cap.

"They're going to get there a lot faster, so they're going to be impacting many more people than they are now," Willetts said.

Home sale generic McCrory justifies tax plan to realtors

Gov. Pat McCrory, who negotiated with House and Senate leaders to craft a tax package everyone could agree on, said lower income tax rates will help offset the deduction loss. The proposal replaces the three state tax brackets with a flat 5.8 percent personal income tax next year, and the rate drops to 5.75 percent in 2015 and beyond.

"I think it's a reasonable amount, but you've also got to think of the benefit," McCrory told the realtors group Tuesday. "The benefit is to hopefully free up some money for those people who can now buy homes."

The people who move those homes worry, however, that tax reform could hamper a market still trying to recover from the recession.

"You can buy a little more home because you can deduct this," Zimmerman said. "Once you take that away, you're going to see pressure – downward pressure – on home values."

Still, realtors breathed a sigh of relief over the budget deal after dodging proposals that would had added a series of sales taxes to every home purchase, for everything from appraisals to inspections to the services of real estate agents and closing attorneys.

"We've come a long way," Willetts said.

11 Comments

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  • JustAName Jul 22, 12:05 p.m.

    Did they worry when they added the home sales tax in Obamacare?

  • and3058 Jul 19, 4:13 p.m.

    The people of this state cannot be represented by the views of these new laws. People that will be drastically affected don't even know it. They are in favor of these callous moves because they feel others will suffer. Unless you are independently wealthy, do not depend on someone providing a job for you, overly saved up (not invested because that get taken from you), these cuts and reductions will eventually catch up with you. Middle class people rarely whine, they serve in the military; middle class people rarely whine, they make sure the environment you go into every day, no matter where it is, comfortable; middle class people rarely whine, they take another blow and keep working, if they have a job to which to go. Someone is obviously very well-set and needs nothing if they are not concerned about how these new laws will impact the vast majority of the people of North Carolina. One day it may be a day that the untouchables will "whine".

  • moveythemez Jul 17, 2:56 p.m.

    Whine, whine, whine, everybody is for spending cuts except when it effects them. Interest deductions on mortages is middle class welfare. Realtors are despicable and the home building industry has the poorest quality of any industry in America.

    Mortage interest deductions artificially inflate the prices of homes.

    Further realtors are notorious for persuading people to purchase more than they can afford. If you are buying a particular house and the decision on the amount you can afford hinges on the interest deduction you should not be buying that house.

    In 1997 our realtor kept trying to show us $450,000 dollar homes, and was furious when we did not listen to her and found one on our own for $225,000, which we mortagaged for 15 years.

    BUY WHAT YOU CAN AFFORD, AND FIRE YOUR REALTOR. YOUR ABILITY TO KEEP OR PURCHASE YOUR HOME SHOULD NOT BE DEPENDENT ON A MORTGAGE INTEREST DEDUCTION. Reject middle class welfare!!

  • rushbot Jul 17, 11:51 a.m.

    whatelseisnew..we live on a very tight budget..we absolutely considered the amount of interest we could deduct when we bought our humble abode..for us, to do so sure seemed a prudent thing!!!

  • whatelseisnew Jul 17, 9:30 a.m.

    "it ought not just be the realtors who are afraid..it ought to be the general contractor home builders who will see demand for expensive (ALL NEW HOMES COSTING OVER $300K !!!)homes plummet."

    No it won't. I don't know of any people that even consider that deduction when they make housing choices. If they can afford to buy into a home in that price range, they are going to do it regardless of this deduction. The purchase is about the property they are going to live in, not about a tax deduction that saves them little in taxes.

  • whatelseisnew Jul 17, 9:24 a.m.

    "amazing how the empowered rich stay that way on the backs of the unprivileged masses."

    Really? I had no idea that anyone was climbing on my back or that I am unprivileged. The main people I see on my back is the Government and the masses of people that want the Government to take money from me and give it to them.

  • rushbot Jul 17, 9:18 a.m.

    oh yes..let me not forget mortgage bankers and processors..the demand for your services will also plummet!! ... ...this will not be giving us jobs, jobs, jobs..no sirreee bob!!!

  • rushbot Jul 17, 9:16 a.m.

    it ought not just be the realtors who are afraid..it ought to be the general contractor home builders who will see demand for expensive (ALL NEW HOMES COSTING OVER $300K !!!)homes plummet..it will be the sub contractors who frame , and intall siding on new expensive homes, plumbers who plumb new expensive homes, electricians who wire new expensive homes, roofers who shingle roofs on new homes..and all the others who work on expensive new homes..landscapers, deck and fence builders, paving companies, trim carpenters.. ..and when demand for their services go down, what will they do??? ANYBODY REMEMBER THE HOUSING MARKET CRASH FROM THE LAST YEAR OF THE LIL' BUSH PRESIDENCY!?!?!

  • mpheels Jul 17, 8:30 a.m.

    I would go so far as to say maybe a little downward pressure is a good thing. Home prices were artificially inflated. The bubble burst and it was a disaster. Let's not start over inflating the bubble again.

  • piloterror1 Jul 17, 8:06 a.m.

    amazing how the empowered rich stay that way on the backs of the unprivileged masses.

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