Wednesday, January 23, 2013
Part of Gov. Sam Brownback's plan to drive down state income tax rates is drawing fire from some in the real estate business.
Real estate professionals are concerned his proposals could hurt the still-recovering housing market.
"It kind of feels like a double-whammy for the housing industry, which is rather hard to fathom," said Wichita Area Association of Realtors CEO Tessa Hultz.
That double-whammy comes in the form of proposals to no longer allow Kansans to deduct mortgage interest or what they pay in property taxes from their state income taxes. Hultz worries that, even with lower income tax rates, losing these deductions will mean higher taxes for some people.
"If you can't write off your mortgage interest deduction anymore and you can't write off your property taxes anymore, you are going to have a significant tax increase," she said.
The housing market in Kansas has been getting better.
"We had our best year as far as total sales since 2009 and our best median price since about 2010," Hultz said. "And 2012 was on an upward trend."
However, some worry getting rid of income tax deductions for homeowners could slow recovery in the housing market as well as the recovery of the overall economy.
"Messing with housing can definitely hurt something that hasn't fully recovered yet," said Jamey Blubaugh, a Wichita real estate agent.
Supporters of the governor's proposals say lower income tax rates will put more money in Kansans' pockets, but Blubaugh worries the tax plan could impact the money people invest.
"The largest investment that people have is not their 401(k) or their money they're saving; it's their house," he said. "By taking that away from people, you're going to be hurting somebody's net worth in the long run."
A Senate committee is expected to open hearings on the governor's tax plan next week.