In just a few days we're going to have a presidential election that can forever change the course and character of our great nation. For me, it's about individualism, capitalism and free enterprise that make our nation the shining beacon of freedom throughout the world. The other side is an ever-expanding government that has been eroding our private individual liberties and openly encouraging government dependence, to create a voting block that will propagate one party rule.
Sure, that's just my opinion, and I know others will vehemently disagree. It's great that we still have a country where people can freely express their opinions. How does this affect the real estate industry and its participants directly? Luckily, we have Obama's track record to refer to here, and that's exactly what I'm going to do to show that based on his track record, if reelected, the chances are extremely high that his past actions will be good indicators for what is coming toward the real estate industry in the next four years with no worry about reelection.
One of the early moves President Obama made after his election was a proposal to reduce the home mortgage interest rate deduction. Sure, I understand this, and a lot of the other examples I'm going to cite, may have what some perceive as a collective good benefit. Perhaps it is just a change in society that is long overdue. But, I believe these examples, when taken together; definitively show that President Obama is no friend to the real estate industry.
Go back to the first proposal by President Obama to reduce the home interest rate deduction. This was included as part of the President's budget proposal for 2010 for all my fact checking friends reading this. Sure, to make it palatable, it was to start for those in the higher tax brackets. Once in place, does anyone really doubt that when the government needs more money, as it always does, we would see those tax brackets slowly decrease?
Luckily, even with full control of all branches of the federal government, this proposal was not passed. Just thinking about it, I don't believe any budget that President Obama has proposed has ever been passed! Now I could be wrong, but I just don't recall any time that the government has been running for years without an approved budget.
The second fact that I'd like to bring to light occurred in December 2011, when the Senate approved a two-month extension of a payroll tax cut. You see, this tax cut was in exchange for an increase in fees on all new mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA). As you know, approximately nine out of 10 new mortgages are backed by these agencies.
It was projected that these new government mortgage fees would add approximately $180 a year to a $200,000 loan and $360 a year for $400,000 loan! Sure, these new fees are built-in to the loan but they're also payable throughout the entire life of the loan. So in essence, for a two-month payroll tax cut, the majority of loans issued in the United States now have a new fee built-in to their repayment schedule.
Lastly, the real estate industry narrowly missed another bullet aimed at it in the first year of President Obama's term … The American Clean Energy and Security Act. The part of this bill affecting us in the real estate industry would have basically created mandatory energy audits for all home sellers in the United States!
Sure, under the guise of creating more energy-efficient homes, politicians didn't seem to give a second thought about the constitutional rights of its citizens. Perhaps this proposal would've had a better chance of passing, if they just applied it to new construction.
When reading this legislation, it immediately brought to mind thoughts of the TSA. Sure, the homeowner would not have had to pay (at least in its initial stages) to bring their home up to some preset energy efficiency level. They would have to pay for the report itself (and give it to the buyer), and since the report would most likely have to be done by some new green shirted government agency, this would just be another potentially expensive cost added to the home sellers cost.
Yes, I know I'm being tough here, and perhaps these mandatory energy audits should have been pushed more like a new jobs bill. Sure, just like the TSA we could get tens of thousands former fast food workers (we really don't need so many fast food outlets anyway) into the new government mandatory home energy audit Bureau, supply them with nice bright green shirts, embroidered with the agency's new tree logo, give them two weeks of training (the majority of which would be geared toward diversity acceptance) and send them out to search through every crack and cranny of all home seller's residences.
Lastly, we have Obama-care, where a new 3.8% provision was squirreled away that will affect many home sellers starting January 2013. Although the media has done a great job convincing the masses that this 3.8% tax will only affect those having an adjusted gross income over $200,000, what's not being reported is that after the current tax exclusion on the sale of your principal residence, any additional gain is added to your adjusted gross income in the year of the sale. So, if you've been a long time owner of a California home, and even though you're making just $40,000 a year in retirement, depending on the gain from the sale of your home, over the current tax exclusion, you may be in for a substantial additional tax.
What's really disconcerting to me is that all of the above examples affecting the real estate industry were proposed or passed during the worst time for the housing market since the Great Depression! If President Obama is reelected I have no doubt that we will see another push for reduction in the home mortgage interest rate deduction right-off as well as mandatory energy audits. So just as the industry is getting to its feet, if such proposals are passed, there is a high probability we will hit the canvas again.
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Bob Schwartz - Calif. real estate Lic.#00706331 brokerforyou