April 20, 2009
Today, the MN House of Rep. Tax Committee released a "delete all amendment" to HF2323 & added provisions that are negative for real estate in the Omnibus Tax Bill. Authored by DFL Rep Ann Lenczewski, it contains a number of tax law modifications that hurt all MN home owners. Please review & distribute this "Call to Action" to your clients, customers & friends/family.
HOUSE TAX BILL HURTS REAL ESTATE. The DFL House Tax Plan raises revenue by cutting a number of income tax deductions. The DFL House plan eliminates two major real estate tax deductions: the Mortgage Interest Deduction & Real Estate Property Taxes. The bill also eliminates provisions of the Relative Homestead Tax.
Elimination of Mortgage Interest Deduction (MID) a feature of the tax code since 1933, the MID helped numerous generations achieve the American Dream of owning a home. A significant public policy objective for decades, homeownership stabilizes families, neighborhoods and communities. The House DFL Tax Bill eliminates the MID for homeowners & replaces it with a "housing credit" for qualified homeowners. The maximum credit is $420, which is equal to 7% of up to $6,000 of mortgage interest paid during the taxable year, however, no credit is applied to the first $4,000 of interest paid. Therefore, a homeowner must pay at least $10,000 in MID in order to receive the full $420 credit. Example, if a homeowner has mortgage interest of $8,000 in the tax year, the credit equals $280. ($8,000-$4,000=$4,000X7%=$280.) This provision hurts young families disproportionately because mortgage debt loads are highest when people are establishing their households. This provision changes the financial plans numerous families have made when purchasing a home and increases the financial difficulties many are facing during this economic downturn. At a time when housing is finally getting a financial foothold why eliminate a tax provision that has helped millions of families achieve the "American Dream?"
Real Estate Property Tax Deductibility- People should not have to pay income taxes on property taxes they pay. This public policy provision has been included in the tax code since 1933 and allows taxpayers to deduct property taxes paid from their income. As an example, if you pay $2,000 in property taxes why should you also pay income taxes on that $2,000 - a version of double taxation? The House DFL Tax Bill eliminates the deductibility of real estate property taxes at a time when local property taxes continue to increase faster than Minnesotan's income. Taxing taxes, is in our opinion, poor public policy.
The MNAR has a long and respected position that government, at all levels, needs to "Live Within Your Means." Just like families sitting around the kitchen table trying to make ends meet, MN legislative body should not be adding to the long-term financial burden of MN homeowners. The House DFL Tax Bill penalizes families who have invested in the American Dream & provide for the backbone for stable communities.
ACTION REQUEST:
1) Please contact your legislator. It is quick & easy & you can add your comments to the letter. See sample letter format suggested below.
2) Send an email to your clients, customers and friends. Let them know what is being proposed and give them the web address below to review the bill.
http://takeaction.realtoractioncenter.com/campaign/taxbill/forward/wg5w363rqj6e3xxe?
3) CALL your legislator about this tax bill. Let him/her know your concerns and how it will impact your clients, your family and your business. Let your Rep know that it is time for our elected officials to "LIVE WITHIN YOUR MEANS" by prioritizing spending and not raising taxes. Please find your legislator's contact information or use this link: http://www.leg.state.mn.us/leg/Districtfinder.asp
You can access the bill summary (48 pages) at http://www.house.leg.state.mn.us/hrd/bs/86/HF2323.html
Sample Letter:
Dear [Decision Maker],
Please oppose the elimination of the Mortgage Interest Deduction and deductibility of real estate property taxes found in HF2323. Many Minnesotans have made housing decisions based upon the Mortgage Interest Deduction and deductibility of real estate property taxes. By changing these deductions you bring additional instability to a weakened housing market and make it harder for Minnesotans to sell homes with values over $200,000.
We understand that the state legislature is dealing with a significant budget shortfall, however, eliminating or significantly modifying the Mortgage Interest Deduction and deductibility of real estate property taxes is not the correct direction for Minnesota.
Respectfully,
Your Name and Address.