The members and staff of the Sussex County Association of Realtors joined fellow Realtors from across the country recently in praising the safeguarding of the financially crucial Mortgage Interest Deduction tax credit.
The deduction, which saw its infancy when income taxes were mandated by an amendment to the U.S. Constitution in 1913, and Congress subsequently made all interest payments deductible, was in danger of being eliminated during the so-called fiscal cliff negotiations in Washington, D.C., late last year.
The program’s continuation was included in the compromise deal reached by the Legislature in the final hours of 2012, a relief to real estate associations in Sussex County and across the nation.
Mortgage interest deductions are a nearly $100 billion expense annually for the United States Treasury; thus their elimination was considered when dealing with the country’s mounting debt crisis this past fall. But real estate experts, including Realtors in southern Delaware, feared that eliminating the tax break would have had a far-reaching impact on the housing market.
“There is no doubt in my mind that eliminating the Mortgage Interest Deduction would have had significant adverse effects on a housing market that has shown so many positive signs over the course of the last couple of years,” says Bob McVey, 2013 president of SCAOR. “We have seen steady increases in real estate sales for several consecutive quarters now, and we don’t need anyone or anything halting that momentum. We are certainly pleased that the status quo was maintained by Washington in that regard.”
One of the most important charges for SCAOR is to act as a legislative watchdog, not only in the local area, but also on the state and national levels. When members see a piece of pending legislation that could have significant consequences on southern Delaware’s real estate industry, they act as a unified voice in support of, or opposition to, that legislation.
Often organized calls to action are taken so legislators will realize that members of the industry are united in their beliefs. Speaking out against the revocation of the Mortgage Industry Deduction was one issue that Realtors from coast to coast were outspoken about.
Homeowner sentiments seem to mirror those of real estate professionals, with 76 percent of respondents polled in a recent Wichita Business Journal survey saying the deduction should not be eliminated by the federal government.
“Having the ability to write off the interest on your mortgage is clearly one of the top financial benefits to owning your own home, along with appreciation and the gradual paying down of your principal balance,” says McVey. “If this were taken away, I feel the consequences to the real estate industry, not just here in Delaware but across the United States, would be catastrophic. We’re finally seeing the economy showing signs of sustained growth. Why would we want to do anything that would bring that to a screeching halt?”
Estimates compiled by the National Association of Realtors indicate that home prices could decline by as much as 15 percent nationally if the Mortgage Interest Deduction were eliminated, or even if it were converted instead to a tax credit, an idea floated around in Washington in recent months and years.
“We are certainly happy that this issue has been resolved, at least for the short term. But we also fully expect that the possibility of eliminating this important tax benefit will arise again soon,” says McVey. “As Realtors, we know all too well that real estate is the engine that, in large part, drives our economy. To even consider taking away some of the tax benefits of home ownership is an extremely bad idea for our country’s long-term economic future.”
The Sussex County Association of Realtors was chartered in 1949 and has steadily grown in size, scope and mission during its more than six decades in Sussex County. It is a professional trade association with goals of carrying out a program of education and advocacy for real estate in the county.
SCAOR is a resource for the public, as well as a recognized advocate for property rights and property owners in Sussex County. The association also monitors legislative issues on the local, state and national levels that may impact home ownership in the area.
To read more about issues related to Sussex County’s real estate industry, go to www.scaor.com.