Budget Battles: The Real Estate Focus

January 1, 1996

However the federal budget battles between Congress and the White House play out in coming weeks, NAR lobbyists have been keeping their sights set on preserving favorable real estate provisions in any compromise the combatants strike.

Here's what NAR has been fighting for:

  • A cut in the capital gains tax rate that supports a meaningful reduction in the capital gains rate from current tax law
  • Penalty-free withdrawals from Individual Retirement Accounts for a first-time home purchase
  • An increase in the percentage of health insurance costs that self-employed individuals can deduct from their taxes.
  • Estate tax reform
  • More reasonable federal tax treatment of tenant improvements to a property
  • Reform of key Subchapter S tax provisions.

President Clinton in early December vetoed the Republican-controlled Congress' first attempt at federal deficit reduction and countered with a budget plan of his own. NAR had supported the Republican plan because of its favorable treatment of key real estate issues outlined here, particularly capital gains. President Clinton's plan does little to help or hurt real estate, NAR analysts say. NAR analysts predict that, with both the Republicans in Congress and President Clinton supporting capital gains relief, it's likely that the final budget plan will include some kind of relief. Its effective date may move from Jan. 1, 1995--as in the GOP plan--to Jan. 1, 1996, as part of a compromise measure.

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