Tax Reform and Housing

Nef Cortez

By Nef Cortez

The current effort to Reform the Tax Code can have some very disconcerting consequences to homeownership in California.

The incentives that are built into the tax code benefit Homeowners directly in the ability to claim as a deduction the interest paid on a home mortgage, as well as the property taxes paid. Eliminating this incentive from the tax code effectively raises taxes for a majority of middle class Americans. The California Association of Realtors (CAR ) and the National Association of Realtors (NAR) have taken the position of strongly opposing the Congressional Tax Reform Act as long as this issue is not addressed in a manner to retain wholly or in large part within the Tax Code.

Tax reform that is passed without the middle class wage earner retaining this incentive will decimate the housing market. The real estate values of today’s homes have had this tax deduction built into it in some form or another for the last 100 years. Even a 10% reduction in property values will cause a ripple effect that would impact millions of Americans, and in many cases would cause home-owners to dip back into a position of being “underwater” in their home loans.

Removing the incentives to homeownership in on fell swoop would cause many negative unintended consequences to America’s middle class. Culturally, it has been shown that home ownership helps to support a more stable living environment, where residents of a community are vested into its livability. A more stable environment has been shown to be beneficial to children in their teen, pre-teen, and formative years.  Socially, anything that erodes the  stability of households will ultimately affect our communities in a negative manner.

I would encourage you to contact your congressional representative to voice an opinion on this issue, as it is critical to most homeowners’ finances.

This article was written by Nef Cortez, a licensed Real Estate Broker, Cal BRE # 00560181 since 1976. He can be reached via e-mail at  Please feel free to email any questions regarding real estate.