REALTORS® have been working against the tax plan for a variety of reasons since its introduction. We have worked all levels of government and one advantage we have in Maryland and particularly in Southern Maryland, are elected officials who are also REALTORS® - they completely understand our concerns on behalf of property owners and our industry. Both Governor Larry Hogan and Delegate Matt Morgan understand this and earlier today, Gov. Hogan expressed those on behalf of all Maryland taxpayers.
After HR 1 recently came out of conference committee, the National Association of REALTORS® took a neutral position on the final language and came away with these takeaways of the final bill which passed 224-201 in the House:
- Capital gains exclusion. In a huge win for current and prospective homeowners, current law is left in place on the capital gains exclusion of $250,000 for an individual and $500,000 for married couples on the sale of a home. Both the House and the Senate had sought to make it much harder to qualify for the exclusion.
- Mortgage interest deduction. The maximum mortgage amount for households deducting their mortgage interest has been decreased to $750,000 from the current $1 million limit. The House bill sought a reduction to $500,000.
- State and local tax deductions. Both property taxes and state and local income taxes remain deductible, although with a combined limit of $10,000. Both the House and Senate bills sought to eliminate the state and local income tax deduction altogether.
- Pass-through entities. The bill significantly reduces the effective rate of tax on business income earned by independent contractors and income received from pass-through entities. This change will lower the taxes of many real estate professionals.