State & Local Taxation

State & Local Taxation

State and Local Taxation (Log-in Required)

Tax Freedom Day 2013 arrived on April 18. That was the day when Americans earned enough money — $4.22 trillion – to pay the nation’s total federal, state, and local tax bill for the year, according to the Tax Foundation.1 This White Paper examines the state and local share of the bill — $1.45 trillion in 2013 – and the host of sales, income, property, excise, and other taxes, fees, and surcharges behind it.

The average American paid $4,412 – or 9.9% of their income – in state and local taxes in 2010, according to the latest State and Local Tax Burden Rankings from the Tax Foundation. Using Tax Freedom Day as a yardstick, the state and local tax burden is inching lower. It took 36.9 days to pay the state and local share of the nation’s tax bill in 2013 — down from 38 days in 2009.

Yet the figures behind those figures are the real story – the horse-by-committee canvas of taxes and tax breaks that fluctuate from state to state, industry to industry, and individual to individual based on the fiscal and political needs and ambitions of the day. Like stacks of blocks in a Jenga game, state and local tax structures tilt as pieces are removed and replaced, creating winners and losers across all sectors – including housing and real estate.

 

 

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Rural Broadband

Rural Broadband Deployment: Strategies for Closing the Digital Divide

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The internet has become such a normal part of day-to-day life in modern society that many Americans fail to realize that millions of their fellow citizens, primarily those in rural areas, lack access to reliable and affordable internet connections. At this moment, while many urban American cities are currently preparing for the rollout of 300 megabit per second download speeds associated with 5G wireless networks, millions of rural Americans (and some in urban areas as well) lack access to connections providing even ten percent of those speeds.

This paper will explore the crucial nature of this issue as it relates to the real estate industry. It will also provide a brief history of deploying broadband in the United States, an overview of the current federal framework for encouraging broadband deployment, and summaries of a number of state regulatory strategies that stand out from the crowd, both positively and negatively.

Questions? Contact Holly Moskerintz at 202-383-1157.

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Sign Ordinances

Real Estate Sign Regulations After Reed (Log-in Required)

Signage is critical to the real estate industry. The display of “For Sale,” “For Rent,” and “Open House” signs is subject to the requirements of local government sign codes, which typically limit the size of signs, where they can be displayed, and the length of time that a temporary sign may be displayed. However, across the country the local government rules for the display of real estate signs are undergoing change.

The U.S. Supreme Court‘s 2015 decision in Reed v. Town of Gilbert is the primary cause of that change — forcing local governments to review and, in many cases, undertake a comprehensive rewrite of their sign regulations in order to avoid potential legal challenges based on constitutional principles articulated in Reed. Because the Reed decision set a strict, uniform standard for the review of content-based sign regulations, many local governments have taken a one-size-fits-all approach to writing their new sign regulations. This approach is detrimental to the signage needs of the real estate industry.

This Guidance Paper has two principal purposes: First, it is designed to assist REALTORS® in understanding after Reed the extent to which local governments can control or restrict real estate signage. Second, the paper provides REALTORS® with information, analysis, and guidance on how to comment on proposed sign regulations and make recommendations to local governments so that new or revised sign regulations are Reed-compliant while also allowing for real estate signage.

 

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State Legislative Priorities Survey

Each year NAR surveys state Association Executives and Government Affairs Directors  to identify the legislative priorities for each U.S. state and territory to develop resources in the following year. The survey is conducted by NAR’s Research Group and the REALTOR® Party.

Questions? Contact Susie Helm at 202-383-1117.

2019 Legislative Priorities Survey

A survey was sent to all state Government Affairs Directors (GADs) and Association Executives (AEs) in September 2018. Results reflect only ONE completed response per state. In three cases, both a state GAD and a state AE responded to the survey. In those cases, the final results reflect only the response of the state GAD. 53 out of 54 U.S. states and territories completed the survey, yielding a 98 percent response rate. The margin of error for the quantitative results is +/-1.81 percent. This is a high enough response rate and a low enough margin of error for results of closed-ended questions to be considered statistically valid and representative of all U.S. states and territories to within this margin of error.

2019 Legislative Priorities Survey Results

Issue Stance

Support
Oppose
Undecided

Number of Issues By Region

Issues By State

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Fair Housing & ADA: Reasonable Accommodations with Service Animals

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About 56.7 million people or nearly 1 in 5 Americans report having a disability. Claims of disability discrimination make up nearly 55 percent of all fair housing complaints filed with the Department of Housing and Urban Development. This White Paper covers the federal, state, and local laws that protect persons with disabilities. Further, there is a discussion regarding the denial of a request for accommodations in housing. There have been several states adopting legislation to prevent abuse of the right to request an accommodation.

 

 

Questions? Contact Fred Underwood at 202-383-1132

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Blockchain Technology

The true impact of blockchain technology on the real estate industry is currently unknown. However, it is predicted to be a major part of all real estate transactions in the near future. Consequently, state governments are recognizing the current use of blockchain technology and some states have taken legislative action to ensure the proper laws are in place to protect consumers and businesses.

Blockchain technology can be explained by using online platforms to conduct a transaction between two or more people. Whatever the transaction is, all parties involved receive information in a secure way. When all parties agree to the terms of the transaction, there is a recorded “block” that locks the agreement in place indefinitely. This ensures the data cannot be altered unless all parties agree once again to accept changes, which would record the new block. New blocks always include a reference to the previous block forming a “chain.” The old block would be visible but clearly identified as having an amended version. Each block of connections/agreements/activities are recorded and stored properly for easy access to data indefinitely.

REALTORS® have a long history of supporting an orderly real estate market which is why it is critical to be involved in any legislative or regulatory effort that may impact real estate transactions now or in the future. Therefore, ensuring consistent definitions in government oversight of blockchain technology ensures a smoother adoption for REALTORS® and consumers.

Blockchain Technology: State Legislative Update

Blockchain Technology & Real Estate Analysis and Strategic Guidance

Blockchain Technology & Real Estate Analysis and Strategic Guidance

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Addressing Your Community’s
Housing Supply & Affordability Needs

Housing affordability is one of the most critical problems facing home buyers and the nation. And the lack of housing supply is only adding to the problem. Comprehensive solutions to address this issue must be locally based and include local community experts — REALTORS® and REALTOR® associations. That’s why NAR has developed resources that work uniquely in each community to address the specific issues related to housing affordability and supply. Find valuable information and tools to start the dialogue in your community.

Local Solutions to Consider

With a strong demand for housing, but not enough supply, home prices are rising. The solution: build more homes, which would ease housing price growth. However, in reality, depending on your location, numerous factors make it more difficult for developers to build more homes. NAR’s Research and Advocacy Groups have created the following list of solutions to consider in addressing your area’s housing supply shortage. Stay tuned as this list will be updated with new resources and information.

Raise Awareness of Housing Underproduction

Use NAR Research’s resources on this website to show how housing production per job growth in your metro area is lower than in the past. The articles below will provide background and help you frame the discussion with community stakeholders.

Bring People Together to Discuss the Issue.

A REALTOR® Party Smart Growth Action Grant or Housing Opportunity Grant can support a forum to discuss the need for more housing.

Resources:

Success Stories:

Form Partnerships among REALTORS®, Builders, Local Government, and Non-profit Organizations.

Identify and reach out to organizations and government agencies that share a common goal.

Success Story:

Promote Accessory Dwelling Units

Accessory dwelling units make it possible for existing single-family lots to provide additional housing, typically one-or-two bedroom units, with lower construction costs than entirely new housing units on a separate lot. This policy would particularly benefit areas with limited land for development.

Many cities are relaxing their laws to make it easier to build second units in single-family-home neighborhoods.

Resource:

Use Publicly-Owned Land for Affordable Housing Production

Most local governments own surplus land, which can be contributed toward projects developed in partnership with builders and non-profit housing developers.

Resource:

Reduce Impact Fees and Streamlining Approval Processes

Impact fees may create additional hurdles to homebuilders, requiring additional funds to obtain permits.

Resource:

Support Trade School & Apprentice Programs

The construction industry is experiencing a shortage of workers. Consider partnering with states and municipalities to support construction trades training in your local high schools and community college.

Update and Reduce Parking Requirements in Location-Efficient Areas

People own fewer cars in locations near public transportation or with other convenient options such as walking, biking, or ride-hailing. Reducing parking requirements can make it easier and less expensive for builders to build new housing. While these minimum requirements add an additional cost to the development, they should be updated to the current needs of the area to avoid overestimated demand.

Resources:

Work with Community Banks to Increase Lending for Housing Development

The Federal Home Loan Bank can provide reliable liquidity to community banks to support housing finance and community investment. For instance, they provide zero interest loan program for costs associated with start-up and feasibility analysis of mixed-use housing and economic development projects in Cincinnati.

Resource:

Amend Housing Rehabilitation Codes

Consider amending rehabilitation codes that are designed to make it easier to renovate older structures by scaling building code compliance requirements to the scope of the planned work. Modernization and redevelopment of older buildings will be less costly for developers while building codes usually add significantly to cost of a project.

Resources:

Reform Land Use and Zoning Regulations

Reform land use and zoning regulations to allow higher densities, including smaller lots for single-family homes, and more allowance for attached homes and multifamily development. This is one of the principles of smart growth. Local zoning codes should permit a range of housing types and densities. Allowing for mixed uses and higher densities can also make your neighborhoods more walkable.

Resources:

Updating Condominium Construction Defect Laws

Consider updating the condominium defect laws to increase the construction of condominiums. In part due to fear of being sued, builders are not constructing condominiums. Several states are tackling their condominium defect laws to make condo construction more attractive to developers.

Resource:

Framing Housing Supply Shortage

Increasing Home Prices, Decreasing Inventory

Lack of housing inventory is considered the main reason that drives up home prices. Although new home construction has picked up, it is still not enough to accommodate the increased housing demand. In the last 6 years, home prices have increased 44%, while housing inventory has decreased by 13%.

 

44%
increase

13%
decrease

Strong Economy, Low Unemployment, & Construction Permit Issuance

As the unemployment rate drops due to a strong economy, the demand for housing is expected to increase as Americans set their sights on homeownership. Data from NAR Research found that, historically, for every two new jobs, one single-family permit is issued. However, currently, a single-family permit is issued for every three new jobs. A ratio higher than the historical average shows that housing supply is still tight across the United States.

3
jobs

1
permit

Localizing the Housing Supply Issue

Housing
Shortage Tracker

The Housing Shortage Tracker compares how many permits are issued relative to the number of new jobs.
Open Tracker

REALTORS® Affordability
Distribution Curve & Score

Compare the housing affordability
of selected metro area level
to the affordability statewide.
Open Tracker

Is your area building enough housing?

Comparing single-family construction with the 20-year construction level and the employment growth for 175 metro areas..
Open Tracker

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National Flood Insurance Program (NFIP)

The National Flood Insurance Program (NFIP) will expire on November 21, 2019, denying necessary insurance coverage to 5 million Americans in more than 22,000 communities nationwide. Congress must act now to reform and extend the NFIP.

The National Flood Insurance Program aims to reduce the impact of flooding on private and public property by providing affordable insurance to property owners, renters, and businesses, and by encouraging communities to adopt and enforce floodplain management regulations. By providing up to $350,000 of flood insurance coverage where required for a federally backed mortgage, it is an alternative to taxpayer-funded disaster assistance. While there is a growing market for private flood insurance, for many, the NFIP continues to be the primary source of asset protection against flooding, the most common and costly natural disaster in the United States.

Learn more.

  • Flood insurance policies typically take 30 days to go into effect—don’t wait until it’s too late. Visit FloodSmart.gov/storm to learn more about your flood risk. #FloodSmart
  • FACT: Just one inch of flooding in your home can cause $25k in damage. This hurricane season, protect the life you’ve built: buy flood insurance. #FloodSmart
  • Hurricanes are unpredictable—you can’t control them, but you can prepare for them. Visit Ready.gov to learn more. #FloodSmart

Social Media Posts

Videos

Federal Emergency Management Agency (FEMA) Resources

National Preparedness Month

Flood Smart Website

Frequently Asked Questions

Photo Gallery

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State Capital Gains Tax Rates

Most real estate professionals are familiar with capital gains taxes especially at the federal level. Meanwhile, state capital gains tax rates might also impact the bottom line. Capital gains taxes are paid at the time of sale of an asset (i.e. real estate). As of May 2018, Guam has the highest maximum rate at 20 percent whereas North Dakota has the lowest maximum rate at 2.9 percent. Download State Real Estate Capital Gains Rate Chart (log-in required) to learn what your state’s capital gains tax rate.

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Rent Control

Housing prices in markets with strong economic growth are skyrocketing. In many cities, lower-income families are effectively priced out of the housing market. In some areas, even middle-income families find themselves stretched to provide adequate housing for their families.

Numerous cities in the four states that permit local rent control and the District of Columbia have attempted to solve their high-rent crises by adopting some form of rent regulation. In some cases, the programs date back to World War II. Most tenant advocate groups and tenants lucky enough to locate rent-regulated housing praise the programs as lifesavers, citing protection from excessive rent increases, reduced tenant displacement, and reduced vacancies. But many analysts criticize any form of rent regulation, noting both negative economic effects on regulated housing markets and detrimental social effects in rent-regulated communities. Most economists strongly disagree that rent regulation creates a fairer housing market, arguing instead that it reduces the quantity and quality of available housing, discourages new construction, encourages eviction without just cause, increases rent for unprotected tenants, and creates other challenges for both landlords and tenants.

 

Questions? Contact Hugh Morris at 202-383-1278.

The opinions expressed in this report are those of the authors and do not necessarily represent the opinions or policy of the National Association of REALTORS®, its members or affiliate organizations.

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