2018 Advocacy: A Year of Wins Amid Political Turmoil
December 28, 2018
2018 Real Estate in Review
Many positive changes happened on Capitol Hill this year thanks to the hard work of REALTORS® who answered calls for action, lobbied in Washington, D.C., and, most importantly, kept lawmakers honest about how ideas percolating in Congress would effect private property rights and the buying, selling, and leasing of real estate. Here are the biggest wins you helped make happen in 2018.
1. 20 Percent More in Your Pocket After Taxes
The federal government’s big tax reform bill, The Tax Cuts and Jobs Act, was signed into law in the closing days of 2017—but one of the biggest wins to come out of that bill was only confirmed this year. In August, after extensive communications with the National Association of REALTORS®, the IRS made clear that independent contractors, sole proprietors, and others involved in real estate brokerage are eligible for the brand new 20 percent deduction of their business income. The clarification was needed because the law stipulates that people involved in brokerage services aren’t eligible for the deduction. But it was never intended to exclude those in real estate, and that’s what NAR got clarified.
2. A Giant Step Toward Association Health Plans
After years of trying to move the needle on association health plans, REALTORS® took a giant step forward when the Department of Labor proposed a rule that broadens the definition of "employer" to include working owners. That’s a term that refers to small business owners and independent contractors like those in real estate. Under the rule, you will be able to band together as part of an association health plan and potentially get the lower costs and greater flexibility that comes with large-group market plans. There’s still a ways to go before AHPs can be formed for real estate, but the rule is an essential step forward. And NAR made sure you could participate in an AHP even if your spouse already has insurance through an employer.
3. Flood Insurance Remains Intact After Hurdles
Lawmakers in both parties agree to the importance of federal flood insurance, which is often the only insurance available to homeowners in flood-risk areas. Even so, the National Flood Insurance Program faced expiration numerous times this year because lawmakers have been extending the program only for short periods of time while they search for common ground on long-term reforms. Thanks to your persistent advocacy efforts, the program has been reauthorized until the end of May 2019. FEMA initially said it would not renew or issue flood insurance polices until the partial government shutdown ended, but the agency reversed that decision Friday after NAR argued that a lapse in the NFIP could hurt the housing market.
4. Finally, Parity for Brick-and-Mortar Retailers
Online retailers have long had a built-in advantage over brick-and-mortar retailers because online stores didn’t have to collect sales tax. As a result, many shoppers bought online, hurting the business model of traditional stores. But thanks to a U.S. Supreme Court decision in June, online retailers have to collect sales tax just like any traditional store, taking away that unfair advantage. NAR supported the move in friend-of-the-court briefs, and its position prevailed.
5. A Clear View of Regulated Waters
Several years ago, the Environmental Protection Agency issued a rule that expanded the bodies of water that are subject to environmental regulation under the Clean Water Act. NAR opposed the expansion because, in some cases, it created expensive delays, even if the body of water was little more than a ditch. That stands to change now. In December, the EPA reversed course and proposed a replacement rule that makes it much clearer that regulated waters should hew closer to what Congress originally intended.
6. Rural Communities to Stay Rural
After years of lobbying, REALTORS® in areas with fewer than 35,000 people and outside of a metropolitan statistical area will stay rural—at least until 2030. That’s important for households in those areas with few options for getting a mortgage except for the federal Rural Housing Service. The definition of a rural area was slated to change with the 2020 census, and many of these areas would have no longer been defined as rural. Therefore, RHS loans would have been unavailable to them. But NAR argued the areas should remain rural by definition, and Congress agreed to push the change back another 10 years after 2020.
7. Credit for Being a Reliable Renter
NAR has been working with credit agencies and other mortgage industry partners for years to help renters become homeowners by making alternative credit scoring criteria, such as rent and utility payments, valid for measuring creditworthiness. Now, thanks to a bank bill that was enacted in May, that goal is closer to reality. The Economic Growth, Regulatory Relief, and Consumer Protection Act eases some paperwork rules for small banks and takes steps to spur the use of alternative credit scores for people who haven’t had a chance to create a traditional credit profile. The action is expected to encourage more first-time home buyers to enter the market.
8. Support for Keeping Real Estate Competitive
Like virtually every other kind of business, real estate has been transformed by the internet—and those technology-driven changes, which have empowered consumers with easy access to listing information, are fueling intense competition among brokerages. The Federal Trade Commission and the Department of Justice used the expiration this year of a 10-year consent decree between NAR and the DOJ relating to the governance of virtual office websites, which represent a small portion of online listings, as an opportunity to examine the level of competition in the residential real estate industry.
9. REALTOR®-Owned MLSs Can Limit Access
A key benefit of membership in many REALTOR® associations is the ability to list properties on an association-owned multiple listing service. In March, a federal court in Michigan ruled that linking the two is reasonable because it doesn’t restrain competition. David Findling, an attorney who sells property as a court-appointed receiver and trustee in estate and bankruptcy cases, had sued RealComp, an MLS owned by eight local REALTOR® associations, on the grounds that requiring membership to use the MLS was monopolistic. Findling’s application to join one of the associations was denied because he isn’t licensed to sell real estate.
REALTOR® Magazine writer Sam Silverstein contributed to this article.
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Updated: January 24, 2020