The Democratic tax package passed by the U.S. House of Representatives last week is not perfect, says the Utah Association of Realtors, but it's better than the plan put forward by President Bush in his State of the Union message in January or the proposal being pushed by Republicans in Congress.
"Our members and the National Association of Realtors believe that this (Democratic) tax proposal is the only realistic vehicle to move the process forward," said Richard L. Wood, president of the 4,300-member Utah association."The real estate provisions in the Democrats' plan are much more beneficial to consumers and to business people than those in either the president's (plan) or the modified Republican proposal," said Wood.
He said that is the message that the UAR and its parent body, the National Association of Realtors, are sending the Senate Finance Committee as members begin deliberations on the tax package.
One of the Democratic proposals that Wood said is applauded by Realtors is the provision which allows first-time homebuyers or their parents to withdraw, without penalty, money from Individual Retirement Accounts (IRAs) to make the down payment on a house.
"Even in Utah's healthy real estate market the major problem facing first-time buyers is the down payment," said Wood.
"IRAs are an excellent source of down-payment capital, but, often, first-time buyers are young people who may not have an IRA. The Democrats' package extends the penalty-free withdrawal to parents of first-time buyers, who are usually in a better financial position than their children."
Other provisions in the package endorsed by Realtors, said Wood, would allow the permanent extension of mortgage revenue bonds (MRBs) and the low-income housing tax credit.
"MRBs have long been a source of most of the funding for low- to moderate-income housing in Utah," said Wood. "If this proposal becomes law, developers and consumers of low- to moderate-income housing in Utah will be assured of a continued source of funding - a crucial element in upgrading our state's housing programs."
Wood noted that the Democrats' proposal excludes the $5,000 tax credit for first-time buyers that was in President Bush's plan. He said Realtors want the Senate to restore that credit to the Democrats' plan.
"Our members strongly encourage the Senate to explore ways to `front load' the homebuyers' tax credit to help more buyers with down payments," he said.