The House on Tuesday passed a federal spending package for
fiscal year 2020 that includes several high-priority items for REALTORS®:
reauthorization of the National Flood Insurance Program through Sept. 30; an
extension of several tax provisions important to real estate markets, such as
mortgage debt forgiveness; and a seven-year reauthorization of the Terrorism
Risk Insurance Program, a particularly significant victory for commercial real
estate practitioners.
The spending package now goes to the Senate for approval,
and President Donald Trump is expected to sign the bills by the end of the
week.
“Confidence and stability are two of the most critical
factors impacting America’s housing market and economy,” NAR President Vince
Malta said in a statement. “Fortunately, this funding agreement delivers that
certainty to NAR’s 1.4 million members and the clients they work hard to serve
every day. The National Association of REALTORS® fought to eliminate
short-term questions surrounding the status of the National Flood Insurance
Program, federal terrorism insurance, and various tax provisions—all of which
will allow our members to plan better, minimize stress for prospective home
buyers and sellers, and keep our nation’s economy moving forward. While
NAR applauds today’s votes, we urge Congress to use the time afforded by this
agreement to work toward sustainable, bipartisan solutions to programs like the
NFIP, which protect millions of Americans every year.”
Still Eyeing Long-Term Flood Insurance Solution
The nine-month extension of the NFIP—which has operated on a
string of short-term extensions and endured multiple lapses over the past two
years—prevents the disruption of thousands of real estate transactions, 1,300
of which would be in jeopardy each day if the program were to expire, according
to research from the National Association of REALTORS®. Still, remaining
uncertainty about the future of the NFIP means lawmakers must use this time to
work toward long-term reauthorization and reform, NAR says.
The association supports the NFIP Reauthorization Act, which
includes a five-year reauthorization of the program, along with reforms to
improve flood mapping, enhance mitigation, and remove obstacles to private
flood insurance. The bipartisan bill, which still has hurdles to clear in
Congress, strikes a delicate balance between NFIP sustainability and
affordability, NAR says. The association will continue to push lawmakers to
find compromise on a longer-term reauthorization and reform package.
Floods are not just a coastal issue: In fact, 98% of U.S.
counties have had at least one federal disaster declaration since 1996,
according to NAR data. Without reforms, the NFIP’s ability to continue
providing critical protections to people across America is in doubt.
Extension of Important Tax Incentives
Included in the spending package are temporary extensions of
three tax provisions directly impacting the real estate industry:
- The exclusion of forgiven mortgage debt from gross income,
meaning that owners of primary residences who sold them short and had part of
their mortgage debt written off will not have to pay tax on the amount
forgiven. - The deductibility of premiums for mortgage insurance.
- The deduction of the cost of improvements to commercial
buildings that make them energy efficient.
These provisions had all expired at the end of 2017.
Tuesday’s agreement extends them, retroactive to the beginning of 2018 and
through the end of 2020.
Terrorism Insurance a Win for Commercial Pros
The seven-year reauthorization of TRIP is significant for
NAR, as terrorism risk insurance is often required to secure necessary
financing for commercial properties. TRIP was facing expiration in 2020, and
the reauthorization comes after NAR publicly supported the Terrorism Risk
Insurance Program Reauthorization Act of 2019.
Absent TRIP, the country would likely see a repeat of what
happened in 2001, when many insurers raised terrorism risk insurance to
unsustainable prices or stopped offering coverage entirely after the Sept. 11
terrorist attacks in New York. NAR says the long-term reauthorization will
provide stability to the commercial real estate industry while playing a
critical role in U.S. national security.
—Reprinted from REALTOR®
Magazine Online, December 2019, with permission of the National Association
of REALTORS®. Copyright 2019. All rights reserved.
