REALTORS® oftentimes are type cast as in it just for the commission check. And while the commission check is definitely the ends that justify the means, they do so much more than just walk someone through the home buying process. They actually care about home ownership!
Take for example the current attack that the US Congress is “considering” on the Mortgage Interest Deduction (MID). Today hundreds of thousands of REALTORS® are calling their Members of Congress to demand that this vital aspect of home ownership be left intact. This is happening as a coordinated effort by the National Association of REALTORS® to defend and protect the MID.
To give you an idea of just how important the MID is to home owners, let me share with you some statistics on how the MID affects a typical home owner in Utah:
Of the approximately 617,106 owner-occupied houses in Utah in 2009, 455,691 or 74% had a mortgage.
In 2008, 379,879 taxpayers in Utah claimed a deduction for mortgage interest. The total amount deducted was $4,437,950,000. This means that the average taxpayer claiming the MID deducted $11,683 from taxable income in 2008.
At a marginal rate of 25 percent, this means that the average taxpayer saved $2,921 in taxes as a result of the MID. The total tax savings from the MID in Utah in 2008 was $1,109,487,500.
In 2008, 408,334 taxpayers in Utah claimed a deduction for real estate taxes. The total amount deducted was $822,286,000. This means that the average taxpayer claiming the real estate tax deduction subtracted $2,014 from taxable income in 2008.
At a marginal rate of 25 percent, this means that the average taxpayer saved $503 in taxes as a result of the real estate tax deduction. The total savings from the real estate tax deduction in Utah in 2008 was $205,571,500.
If the MID and real estate tax deductions were eliminated, the loss would not be a one-year event; homeowners lose out on these potential savings each and every year. The present value of these lost savings could total $26,301,180,000. The value of all owner-occupied real estate in Utah in 2009 was $158,104,291,200. If the lost tax savings are fully capitalized into the price of houses, the average decline in value in Utah would be 17%. From the individual perspective, the median priced home in Utah in the third quarter 2010 was $215,600. A decline in value as projected would mean a loss in home value of $35,866 for the typical home owner.
That is a reduction of almost $300/month in buying power and a drop of 17% in home values. Thankfully 60 Representatives in the US Congress have co-sponsored H.R. 25 to defend the MID, and as I mentioned earlier, hundreds of thousands of REALTORS® are calling on their Member of Congress to support and defend the MID.
Next time you see a REALTOR® thank them for being an advocate of home ownership!