As always, the Alabama REALTORS® public policy team is on the ground advocating for REALTORS®, the real estate industry, and private property rights.
Alabama REALTORS®, first and foremost, monitors all developments for any legislative initiatives that would harm our members or their businesses. As an industry, this is one of the most important roles we play. As former President Calvin Coolidge said, “It is much more important to kill bad bills than to pass good ones.”
Alabama REALTORS® is committed to the private ownership of real property and believes it is the foundation of our nation's free enterprise system. Alabama REALTORS® oppose any governmental actions that discourage or diminish the ability and capacity of Alabama’s citizens to own private property.
Alabamians should have the right to acquire real property with confidence and certainty that the value of such property will not be unduly diminished or jeopardized by government action, such as eminent domain or re-zoning, at any level without just compensation or the owner's express consent.
Alabama REALTORS® supports legislation that protects private property rights and that prohibits any government entity from taking private property for private use. Eminent domain is sometimes needed for roads, bridges, utilities, public schools, and other traditional public uses, but the government should use eminent domain powers for public uses with extreme caution before condemning private property.
Protecting the Mortgage Interest Deduction
Opposing Additional Taxes on Real Estate
The Mortgage Interest Deduction (MID) is vital to the stability of both the Alabama housing market and economy. Reducing or eliminating the MID is a de facto tax increase on homeowners and homeownership. The MID reduces the costs of owning a home, and it makes a real difference to hard-working Alabama families. The benefits of homeownership are many and far-reaching. Higher rates of homeownership correspond to more stable neighborhoods and communities. By encouraging homeownership, the MID helps further the benefits of homeownership as well.
The MID benefits primarily middle- and lower-income families. Approximately 63% of families nationally who claim the MID earn less than $100,000 per year. Replacing the MID with a tax credit or “flat” tax would not necessarily reduce taxes for the middle class, and there is no guarantee that a tax credit would remain in place in the future. Elimination of the MID would cost the average homeowner in Alabama approximately $400 per year.
Alabamians bought their homes with the understanding that mortgage interest is tax-deductible, and many of them have steadily paid down their mortgages to build equity in their home. Eliminating or reducing the MID would destroy the hard-earned equity of home owners. The wealth of most middle-class families is connected to their home. If the MID were eliminated or reduced, market pressures on home prices would drastically impact the wealth accumulation of hardworking middle-class families and the dreams they’ve worked hard to achieve, such as attending college, saving for retirement and starting a small business.
Increases to the Mortgage and/or Deed Recording Fees are negative for both homeowners and our community. Mortgage and Recording Deed Fees are an unreliable source of revenue because of fluctuations in the housing market. These taxes discourage homeownership, hurt investment and economic development, and are discriminatory and regressive. Mortgage and Deed Recording Fees are not a tax on growth. It is a tax on home sellers – people who already live in the state, and it’s a tax on homebuyers – people trying to move to Alabama. Taxing the transaction will drive up the cost of homeownership for everyone.
Mortgage and Deed Recording Fees are like any type of real estate transfer tax and fee, burdening both buyers and sellers of real property and are detrimental to the overall housing market and economic vitality of areas in which they are imposed. REALTORS® strongly oppose transfer taxes and feel these taxes are regressively burdensome to low-income households, discriminatorily levied on one particular class of assets, and are a volatile stream of revenue to governing jurisdictions.
Professionalism in the Industry
A home is the most significant purchase most Alabamians will ever make. While the prospect of a new home or property is exciting, navigating the process can be intimidating. Real estate professionals are trusted advisors to consumers pursuing home or property ownership. In this role, they have the responsibility to act professionally and ethically on behalf of the consumer.
Alabama REALTORS® supports increased levels of professionalism in the real estate industry. Alabama REALTORS® advocates for legislation and regulatory guidelines that benefit both the real estate industry and the consumer. Alabama REALTORS® supports high standards for acquiring and maintaining a real estate and broker’s license by the Alabama Real Estate Commission for the protection of the consumer.
Tax reform has been considered by Alabama legislators and other government officials since the 2015 Legislative Session during which SB 409, a “flat tax” bill, was filed with 20 Senate co-sponsors. This bill would have eliminated the state Mortgage Interest Deduction (MID). Tax reform bills have once again been filed for the 2023 session. We must remain vigilant for threats to real estate and efforts to balance requests for additional revenue on the backs of real estate professionals and/or property owners through increases in taxes/fees or removal of real estate-friendly tax deductions or incentives in the tax code.