Action:
Action is requested at this time to clarify policy for potential upcoming legislation
Options:
Status/Summary:
Currently there is no specific legislation pending encompassing all of these tax incentives. In the past there has been discussion of items such as use of solar panels and energy efficient appliances in the house inenergy legislation and discussions of tax incentives for property owners who lose value of their land due to protections under the Endangered Species Act.
This would be a broader policy that would allow C.A.R. and NAR to advocate for tax incentives when legislation is introduced that requests actions to be taken by a property owner, often at a substantial cost.Background:
There are no tax incentives under current law that support the goal of mitigation, or similar improvements, that reduce exposure of a property owner in the event of disaster. Additionally, many of the tax incentives for homeowners concerning energy conservation are for short periods of timeand have the need for constant renewal. There are a number of bills that have been introduced during the 110th Congress that include some attempts to give tax incentives to property owners if they make capital investments in their property. Most of these bills include features that are both desirable and undesirable in an attempt to address a worthwhile goal. The issues of energy conservation, flood and natural disaster mitigation, and natural wildlife and resources are all going to be debated during the 110th Congress. At this time the framework for the debate on most of these issues is still being discussed and no clear picture of legislation has been seen. Nonetheless, with the limits on the budgets and the newly reenacted PAYGO rules, the costs of these programs can become staggering. Instead of depending on the federal government to take thelead in many of these issues, tax incentives are one way to support private action in making these capital investments.Pro:
These tax incentives would help homeowners and help mitigate the cost of homeownership, something that often benefits REALTORS® and their clients. The availability of tax incentives for energy conservation could encourage more people to upgrade appliances in their house, which can often help entice buyers. Additionally, if there are tax incentives that help homeowners do mitigation for flood damage or natural disaster damage, it can be a strong selling point when a buyer in concerned about purchasing in a specific area due to the potential for floodor natural disaster damage. Finally, if there is a fear that property could one day fall under the Endangered Species Act, the buyer would at least know that while he would lose some of his property value, he would at least gain some tax incentives to offset the losses.Con:
The largest drawback to promoting more real estate-related tax incentives is that Congress has reinstated the Pay-As-You-Go rules. Therefore, any new tax incentive that is granted would have to be off-set by either reducing spending elsewhere, raising taxes in other areas, or eliminating other current tax incentives to “pay for” these new incentives. It could mean that in order to gainfurther incentives, the real estate industry would be asked to give up other tax incentives. Therefore, any movement forward could be met with a movement backwards in another area. Impact on REALTORS®:
Tax incentives that help property owners traditionally help REALTORS® and their clients. They provide incentives for sellers to make necessary or helpful upgrades and they assist buyers in knowing that if improvements are needed or wanted there is some assistance to mitigate the costs. There is a concern though that the addition of these tax incentives could lead to the taking of other current property tax incentives as a way to off-set the loss in revenue that these incentives would create.NAR Policy:
In May 2007 NAR took policy which stated “That NAR support tax credits, deductions, or similar tax incentives designed to encourageowners to make improvement to real property in order to conserve energy, mitigate potential damage from natural disasters and/or satisfy environmental goals related to natural resources and wildlife. Support for tax legislation containing such incentives will be balanced against the competing pressures of real estate-related tax provisions that could be created to “pay for” these incentives.
C.A.R. Policy:
C.A.R. does not have a standing broad policy concerning tax incentives for energy conservation, flood and natural disaster mitigation, and natural resources and wildlife protection.Should C.A.R, in conjunction with NAR, support tax credits, deductions, or similar taxincentives designed to encourage owners to make improvement to real property in order to conserve energy, mitigate potential damage from natural disasters and/or satisfy environmental goals related to natural resources and wildlife. Support for tax legislation containing such incentives will be balanced against the competing pressures of real estate-related tax provisions that could be created to “pay for” these incentives.
