SILVAR. How Tax Reform will Affect BA Real Estate

Press Releases
As Congress mulls tax reform, REALTORS® highlight importance of homeownership

Wednesday, November 15, 2017
As both the House and Senate sharpen their vision for tax reform (the House is expected to vote on its version this week), REALTORS® remain steadfast in ensuring 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® 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."

Here are key differences between the Senate and House bills that would impact homeownership:

State and Local Taxes, Including Property Taxes
The House bill eliminates state and local tax deductions, but allows deductions of up to $10,000 for property taxes. The Senate bill repeals these deductions entirely, including property tax deductions.

Mortgage Interest Deduction
The House bill limits the mortgage interest deduction to $500,000. The Senate would keep the MID for newly purchased homes up to $1 million.

Capital Gains Exemption on Sale of Primary Residence
The House bill says the seller must own and use residence for at least five of the eight years prior to sale. Income limits apply. The Senate version says seller must own and use residence for at least five of the eight years prior to sale. No income limits apply.

MID on Second Homes
The House version eliminates the MID on second homes. The Senate version retains the MID.

Home Equity Loan Deduction
The House plan eliminates the home equity loan deduction for new loans. The Senate plan eliminates the deduction for new and current loans.

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, including property tax deductions, millions would still see their taxes go up and home values would drop," said Welsh.

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term “REALTOR®” is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

For further information, please contact Rose Meily at SILVAR Public Affairs, email, or phone (408) 200-0109.

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Will Massachusetts residents lose tens of thousands of dollars in home value if Republicans succeed in ramming their tax overhaul bill through Congress?

The National Association of Realtors says yes. It has estimated that homeowners in the state could lose an average of anywhere from $21,050 to $44,130 in home value, depending on the congressional district they live in. Nationwide, homeowners are facing a 10 percent drop in values because of the bill, with potentially steeper decreases in higher-cost areas, the group argues. “Make no mistake, middle-class homeowners will see their home values fall if this proposal moves forward, while large corporations walk away with the bulk of the tax cuts,”

“While the bill reduces taxes on average in every income group”

So they are crying because the bill makes taxes more even for everyone, and there’s less special interest influence benefiting home owners. People love to say the bay area is cheap compared to London, Hong Kong, etc. Do people in any of those places get to deduct mortgage interest and property taxes on their income taxes? Hint: they don’t, and it isn’t hurting their real estate prices.

@buyinghouse You realize all those countries where taxes collected are 40% of GDP that you love don’t let people deduct these things from their income taxes. You can’t say you want to be like those countries and advocate for tax deductions those countries don’t get. Well, you can do that but it makes your whole argument laughable.

Food is cheap in HK right? In Singapore, food prices in hawkers’ centre is low. Are food prices low in London, Paris and Berlin too?

Those places get free healthcare, free maternity leave, cheap colleges+ others… but I’m sure you already knew that…

People who have lived in those countries & know more please feel free to comment…


The removal of the huge deduction for state income tax means lost disposable income for the $100-500k income folks that buy BA houses

The taxes collected are a much higher percentage of GDP than in America, so all that “free” stuff isn’t so free. They have lower incomes than the US, and their take home pay after taxes is much lower. Yet, RE is crazy expensive.

Food in the US is cheap by historical standards.

@elt1 People making that much can adjust their budget elsewhere. Housing will be a priority, and they’ll continue to buy it. They’ll just drive older cars, vacation less, buy less expensive clothes, etc.

cooool… seems like the people are getting richer… exactly why the tax reform was enacted… :slight_smile: .

Also, did you forget 70% of US economy is consumer spending? :slight_smile:

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Now you’re mixing bay area specific complaints vs. national level impact. I already explained why it won’t impact at the national level. Already, only 30% of people itemize anyway. Increasing the standard deduction makes it so less than 10% would itemize. There’s zero impact outside of areas like the bay area.

Exactly… so the taxes in Bay Area is going up for individuals, without them getting any benefits like the other countries get which they pay for.

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People in the BA are already house poor. The tax advantages of buying will be gone… Appreciation is going to slow down… Two pillars of buyers incentives gone. That will effect demand.


Their taxes are still low by the standards of those countries. Also, a large portion of their taxes are to the city, county, and state. Those taxes should uniquely benefit them, since those tax dollars are spent locally. There’s not a strong argument for why local taxes should be deductible on federal taxes. Does any other country allow it? Do people in Iowa benefit from CA’s high property taxes and state income taxes?

Your crazy high CA taxes do pay for many of the same benefits those countries have. UC and CSU tuition is free if your family makes under $80k/yr. CA has a huge medicaid program with much higher income limits for qualification. CA has some of the highest unemployment insurance payments. Those things uniquely benefit CA residents, so it makes sense local taxes pay for them. Why should those local taxes be deductible against national taxes? The rest of the nation doesn’t qualify for those CA programs, so they aren’t benefiting from them.

I’m curious why a state hasn’t made their income tax rates equal to the federal rates.

SFO+San jose GDP is 27% of California GDP.
Los Angeles+ San Diego is 47% of CA GDP.
So total 75% of CA GDP.

CA is 13.3% of US economy.

Similar calculations can be done for NY, NJ, IL, MA , WA and others.
NY+NJ is 12.3% of US economy.
i.e 3 states have more than 25% of US GDP.

So, this might have a higher effect on the overall US economy than being only localized to local economies.

State GDP%


Anyways… Bay Area residents, start saving for the used Honda accord, and going to Salvation army for clothes :wink: and go to the local park for vacation :rofl:


Ok… dude, I’m not an economist… we will see what happens…


Seattle Residents too… :slight_smile: :wink:

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[quote=“marcus335, post:7, topic:3557, full:true”]

I don’t know where the USDA got there figures from but I believe they are wrong. I can tell you from personal experience, I worked in a food store when I was young and they were busy all the time. If you go into any major chain grocery store now, you find it almost deserted. The difference is is a lot more people are eating out or taking home take out meals. There are 3 or 4 times more restaurants than there used to be and that is per capita.

Restaurants used to be mostly fine dining only. Fast casual and fast food have changed it. You can dine out more often now without spending more money, because the cost per meal compared to median income is so much lower. McDonalds and Subway have more locations than any other “restaurant” and both are cheap.

We don’t have state income tax in WA :slight_smile: Property tax is only 1% of home value and home values are 30-40% lower than the bay area.

San Francisco restaurants have already been hit squeezed by high wages and patron resistance… I think the whole BA economy will be hurt by this new tax bill…
Californians need to respond by forcing Brown to lower taxes and spending… Lots of people like me are heading for the exits and without our tax money California will go bankrupt… 50% of Californians pay no income taxes


I remember data that since 1970 the population of California has doubled but the number of income tax payers has stayed the same. That’s honestly the same issue at the national level as well. That’s not sustainable. Your tax payers get fed up and leave.