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Real Estate related legislation in our near future

I went to a seminar this week that was given by a CA Realtor Association lobbyist who works in Sacramento and gave us some scary information about proposed leglislation that they are fighting against.

Here are some of the highlights of what he told us:

1.  The CA state sales tax could soon include services from lawyers, doctors and realtors.  For example, if a realtor charges and collects 5% of the purchase price of a million dollar home, that 50k would be taxed at 9.75% and that money would have to be collected and sent to the state like a normal sales tax.  I personally think the chances of this passing are slim.   The administration costs would be enormous.  Who pays, who collects, who send to Sacramento? 

2.  Challenges to Prop 13.  More power is being transferred to city governments vs. the state government and thus, cities want to challenge prop 13 to get more money to pay for services, debt etc..  This one could be interesting.

3.  Mortgage interest deduction.  This is more of a federal government proposition.  I really doubt we will see this as a major sweeping change for tax purposes.  But more likely possibilites include income property or second home deduction changes or elimination of those, elimination of the mortgage interest deduction for high income individuals (250K and up)?  Who knows how this one will play out but I will be watching and happy to support this being killed.

4.  Reduction of the jumbo conforming loan limits from 729k down to 625k or below.  This could make a big impact in our area since the average sales price is over one million dollars.   They will also raise down payment requirements and fees for Fannie and Freddie loans which means less people will qualify for those.  These changes are the most likely of the items I have discussed to occur. 

So my advice to potential home buyers is… BUY NOW!

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