Members of the Silicon Valley Association of Realtors joined thousands of California realtors in Sacramento for Legislative Day May 12. The annual event gives realtors an opportunity to meet with legislators and discuss important issues affecting their industry.
As one of the largest groups in the state to have an annual audience with lawmakers, the realtors voiced their opposition to several legislative proposals that they considered harmful to real estate. Following are realtors’ objections and the reasoning behind them.
• Forced overwithholding on independent contractors. There is no evidence that independent contractors are failing to pay their income-tax obligations. This change would merely create significant administrative burdens for individuals and administrative costs to the Franchise Tax Board, because it would have to issue refunds to those independent contractors whose withholding remitted to the state exceeds their income-tax obligation.
• Tax on services. Over the years, several pieces of legislation have been proposed to impose a sales tax on special services currently exempt. A tax on real-estate-related services would increase the cost of housing because all services involved in purchasing a home would be taxed, including appraisals, home and structural pest control inspections, escrow services and loan fees.
• Changes to the mortgage interest deduction. Legislative interest has increased at both levels of government in scaling back the amount of the deduction. State and federal laws limit the deduction to the interest paid on a maximum $1 million of mortgage debt for first and second homes, plus $100,000 in home-equity debt. The deduction encourages home ownership, which promotes community stability, savings and long-term investment.
• SB 184 (Mark Leno-D San Francisco) – Rent Control. Realtors said SB 184 would weaken the landmark Costa-Hawkins Act that limits rent control by allowing local jurisdictions to control rents on newly constructed rental housing. This bill would discourage the creation of new rental housing, which is badly needed.
Silicon Valley Realtors met with state Sen. Joe Simitian and Assemblymen Paul Fong, Jim Beall Jr. and Rich Gordon, and staff from Sens. Elaine Alquist and Sam Blakeslee’s offices. The legislators pledged their support on most of the issues raised, but said that the state’s financial woes are their major concern.
Simitian said the budget is in crisis and property values in Silicon Valley could, in the long run, be affected, and urged the realtors to support a tax extension on the June ballot.
The legislators united in their strong support for the mortgage-interest deduction.
“The strength of democracy is in maintaining a strong middle class,” Gordon said. “Democracy is also dependent on a strong sense of community. Home ownership is one of the critical factors in the creation and maintenance of community.”