KAR Supported Provision Restores Mortgage Interest and Property Tax Deductions to 100%

Last week the State Legislature overrode Governor Brownback’s veto to pass a new tax bill (SB 30). Within the tax package, KAR obtained provisions that would phase-in restoration of the MID and PTD, a significant win for Kansas REALTORS® and property owners. The new law goes into effect July 1, 2017.

KAR’s top priority going into the 2017 session was to protect the current deductibility of MID and PTD at 50%. The opportunity arose to put these deductions on the path to full restoration. Thanks to consistent work and conversations with pro-real estate lawmakers at the Capitol, we were able to make full restoration part of the final tax package.

Under the new law, the MID and PTD will increase to 75% for the tax year 2019 and to 100% beginning in tax year 2020. The laws also phases in the ability to deduct medical expenses.

The new tax law has individual income tax rates increased, beginning in tax year 2017, with the state returning to a three-bracket system of 2.9 %, 4.9 %, and 5.2 %. For tax year 2018 and all years thereafter, the rates would be 3.1 %, 5.25 %, and 5.7 %. Current law provides for a two-bracket system with rates of 2.7 % and 4.6 % in tax year 2018.

The final tax package did not include any sales tax on services. KAR opposed attempts to subject rental of storage units, security services, and non-residential cleaning services to sales tax. Additionally, residential utilities will not be subject to fees and sales taxes.

All of these would have increased the cost of property owners and specifically our Kansas homeowners.


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