The Good, the Bad and the Potentially Ugly – Message from the President with Mike Theo

A Message from the Wisconsin Realtor’s Association President with Mike Theo

The Good, the Bad and the Potentially Ugly

By: Mike Theo
“Reform? is an interesting word. It connotes improvement, transformation, modernization, restructuring. All positives, right? While well-intended, some reforms can have unforeseen consequences and even be downright harmful.
Congress wants to reform the tax code and the secondary mortgage market. Most Americans ? and likely most REALTORS? ? would agree that reforms to both are needed. But when, where and how these reforms are designed and implemented could dramatically change the real estate marketplace in America. We may be at a critical moment in history. Time to tune in.

Tax reform

Congress has employed a new style of discussion for tax reform this year that they call the ?blank slate.? This approach asks members of Congress to start with a tax code that is blank, with no exemptions or deductions. If they want to keep existing ones or create new ones, they must justify both in terms of encouraging certain behaviors or investments and in terms of tax revenues to the government. It?s a novel, if not refreshing, approach.

The National Association of REALTORS? (NAR) and the WRA have accepted that challenge and have communicated to our congressional delegation asking them to preserve, and in some cases enhance, certain specific real estate tax provisions. The most important of these tax provisions are the mortgage interest and real property tax deductions. These deductions have been among the most popular and widely used part of the tax code for over 100 years. The value of these tax benefits are embedded in home prices and the primary beneficiaries are middle class families. Eliminating them would deflate home prices and discourage homeownership.

We have also asked Congress to maintain the capital gains tax exclusion on the sale of a principal residence. Real estate, mainly in the form of the family home, is the most widely held asset for American families. The current capital gains tax exclusion makes tax filing and retirement saving easier for millions of Americans, and it encourages homeownership. We have argued that this exclusion should not only be preserved but the limits should be indexed for inflation to maintain the value of this benefit over time.

Because the housing recovery is far from complete and many homeowners continue to face foreclosure, short sales or loan restructuring, we are urging Congress to maintain the exclusion of mortgage debt cancellation. The current temporary provision allows families to avoid paying income taxes on ?phantom income? at a time they can least afford to pay. This is an important anti-recessionary measure and should even be made permanent.

Real estate investments play a key role in economic growth and job creation, so we are also asking Congress to shorten depreciation periods for both commercial and residential buildings to reflect the true and useful lives of these assets. Moreover, we have asked that the temporary provision allowing faster write-offs for leasehold improvements be made permanent.

Finally, we are advocating that Congress maintain the deferral from taxes for gains on like-kind exchanges. Our current tax code recognizes that if two properties of like kind are exchanges, nothing economically has changed and thus taxes should not be levied. Encouraging the free flow of capital among investments is good for the economy and jobs and thus the current deferral of gain on the like-kind exchange should be maintained.

Mortgage market reform

Congressman Jeb Hensarling, a Republican from Texas who chairs the House Financial Services Committee, has introduced a bill to significantly restructure financial mortgage markets in America. His plan would dissolve Fannie Mae and Freddie Mac and replace them with a new Market Utility. His bill would also restructure the FHA Mortgage Insurance Program. As currently written, we are asking Congress to oppose these changes.

NAR argues that without some federal government guarantee for a secondary mortgage market, 30-year fixed rate mortgages could disappear. The proposed restructuring of FHA will make many borrowers ineligible for FHA financing, regardless of their creditworthiness or the availability of alternative financing. Moreover, NAR estimates that higher down payments could make 345,000 borrowers a year ineligible for FHA financing, and lower loan limits will limit liquidity and borrowers? access to credit.

Calling all REALTORS?!

Here?s the punch line: It?s time for each and every one of us to engage our members of Congress and help them understand the good, the bad and the potentially ugly impacts of these tax and mortgage finance proposals. And help them make the right decisions for American families, businesses and economy.

Regardless of your political persuasion, these issues are serious, and Congress is giving them serious consideration as we speak. Take a minute to respond to Calls for Action, from NAR and from the WRA, and advocate for these important issues at this critical time. If not for your own enlightened self interest, then in the interests of families and businesses who will suffer or soar based on our success or lack thereof.

Published: August 08, 2013
Original Post:

Milwaukee Landlord Registry

This sounds like it doesn’t do anything, but assess another fee on Rental Property Owners.

Article from the Wisconsin Realtors Association, Video from Milwaukee Channel 58, June, 2013.
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Bill would End Landlord Registration Program
by Elizabeth Fay
Story Created: Jun 23, 2013
Story Updated: Jun 24, 2013
MILWAUKEE — A bill making it’s way through the state legislature could make it harder for tenants and neighbors to contact landlords in Milwaukee.

Right now, landlords in Milwaukee are required to pay a $40 fee to register their information with the city. That information is made available online to the public in an effort to make it easier to reach the property owner when there’s a problem. However, under a proposed landlord-tenant bill, landlords would no longer have to register their information.

Alderman Michael Murphy says that will make it difficult to quickly address problematic properties.

“Every single day, I get complaints from citizens about bad landlords who are not taking care of their properties. I personally call that landlord and give them a shot to make a good faith effort. I won’t have that ability anymore. I will have to track them down,” said Ald. Murphy.

However, Joe Murray, Director of Public and Government Affairs for the Wisconsin Realtors Association, says the City of Milwaukee has been tracking down landlords for decades without the registration program. He thinks the city is actually concerned about money.

“They certainly had no problem knowing who to send the property tax bill to. So, from our perspective, what you have with the landlord registration fee is maybe a little more efficiency in contacting landlords on the edges, but what you really have is an excessive $40 per unit revenue fee,” said Murray.

The bill already passed in the Wisconsin State Assembly and has yet to go before the senate.