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They get a taxes when it comes to filing that we all love pale little less -- -- the new proposal could make tax breaks a thing of the past it's being called the blank slate plan.
As being proposed in the senate right now essentially it would wipe out all tax credits deductions and exemptions with the goal of getting a simpler tax code.
But our next guest says it's bad news for the American the average American especially if you're a homeowner here -- real estate expert.
Very Olson Gerri nice to see this morning.
Good to see you Clayton are -- -- exactly what is happening and how this could be how this could adversely affect homeowners.
Short while some people would argue that the blanks latest sort of legislators attempts to remove themselves from -- hot seat.
I mean essentially what they're doing is saying that every exemption.
Every credit every deduction -- gonna assume is off the table now and you've got to let us know which ones you want to put back on the table by July 26.
The impact on homeowners and also mom and pop investors could be huge principally because so many Americans.
Are homeowners and keep the majority of their wealth in their homes and we know that when folks feel that they have these benefits they're benefiting out to the tune of thousands of dollars a year from the mortgage interest deduction from capital gains exclusions.
The ability to not pay income tax on real estate taxes that they -- that sort of thing they have a wealth effect they have better consumer confidence and they spend more.
Those mom and pop investors are the ones have been saving -- foreclosures they're the ones propping all of our home values up.
By buying foreclosures converting them into homes and they're doing that taking that risk because of lower capital gains rates and the benefit of 1031 exchanges.
Which are on the table now.
Yeah let's let's go through some of these more specifically capital gains after selling a home so right now.
You have to live in a home for two years as your primary residences I understand right that you don't paid out large capital gains tax on the property.
But that could be on the chopping block and it might not be able to get that exemption anymore right.
That's correct there's an X.
-- for homeowners up to a certain amount of money.
But also investors actually pay a lower rate for capital gains when they sell homes and we know that the more homes we can get mom and pop investors to buy.
And the more we can get them to pay for those homes the more our own home values are going to increase right now especially -- when we still have.
20% of homeowners with a mortgage under water we still have six million defaults and four million foreclosures the last thing we want to start doing is -- weeding those mom and pop investors.
From continuing to help our housing recover.
I'm real estate depreciation does this apply to those who own my rental rental investments that they are able to claim that some appreciation.
Correct that's mostly an issue again for these mom and pop investors who -- benefited significantly.
And again the more money we take out of their pockets in the form of taxes the less willing they're going to be to help our real estate economy recover and finally the big -- -- -- it you know anyone -- a homeowner always look forward to is that mortgage interest deduction.
That is also on the chopping block correct.
Absolutely and you know what -- that's gonna -- impact younger buyers and those first time buyers who are already hurting.
They have the smallest percentage of home purchases as it is they're the ones really grappling with the new financing rules -- -- to see the down payment.
And that huge student debt that we've been talking about.
The last thing we want to do is discourage first time homebuyers to buy -- home because they're the ones who also help the rest of us move up into newer homes.
So the mortgage interest deduction can add up to thousands of dollars -- years.
Minimum to a 3000 dollars for average homeowners we don't wanna be impacting that just now these rules are -- -- to begin they wanna have -- completed -- 2014.
And we know are real estate and housing is not gonna recover at least until 2017.
So we really don't wanna play with that why this blank slate may be a bad idea after -- -- -- Real estate experts joining us this morning from Miami we appreciate it.
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