Now more than ever, the return of a healthy real estate market and real estate industry is vital to restoring strong economic development and job growth in Kansas. The real estate industry plays a unique and major role in stimulating economic growth for the Kansas economy and creating new jobs and income for Kansans.
Each year, the construction, development and real estate industries generate $16.9 billion in economic growth for the Kansas economy, which is over 12% of the state’s total Gross Domestic Product (GDP) and the third-largest industry in the state (right behind the government and manufacturing sectors).
In light of the very important role that the real estate industry plays in the Kansas economy, REALTORS® believe that increasing the number of affordable housing opportunities for Kansas families and promoting investments in our state’s commercial real estate positively impacts our neighborhoods, communities and the overall economic environment in Kansas.
In order to unlock real estate as an economic growth engine for the Kansas economy and protect the rights of private property owners, the Kansas Association of REALTORS® would respectfully request your support of the following public policy priorities:
1. Oppose Any Attempts to Eliminate the Ability of Middle-Class Home Owners to Claim the Mortgage Interest and Property Tax Deductions
- In 2013, the Kansas Legislature passed income tax reform legislation that protected the ability of middle-class Kansas home owners to claim the mortgage interest and property tax deductions on their state income tax returns.
- Eliminating the mortgage interest deduction and other vitally important deductions would have increased the tax burden for 417,000 middle-class Kansas home owners. The Kansas Legislature wisely rejected this proposal that would have damaged the Kansas housing market and economy.
- Home owners and small businesses desire a consistent tax code that does not continually change from year-to-year. In 2014, the Kansas Legislature should not take any actions that would create uncertainty over the tax code.
- After two years of divisive and time-consuming debates over the state income tax code, now is the time for the Kansas Legislature to move on to other pressing issues facing the state.
- Kansas REALTORS® will absolutely oppose any attempts to re-open the debate over income tax reform during the 2014 Legislative Session, which could put these very important tax deductions for middle-class Kansans at risk for elimination again. This is the only way to DO NO HARM to the recovering housing market!
2. Support Fundamental Reform of the Kansas Property Tax System to Provide Meaningful Relief from Crushing Property Tax Burdens
- From 1997 to 2012, property taxes collected by state and local governments in Kansas increased 131.8% from $1.35 billion in 1997 to over $3.1 billion in 2012. Over this time period, the state’s overall population only grew 11.2% and inflation increased by just 39.8%.
- Your constituents are seeing their property tax burdens grow by 8.8% per year. If the Kansas Legislature does nothing to stop this massive annual growth in property taxes, the property tax burden on Kansas home owners and small businesses could double again to roughly $6.0 billion annually in 2020.
- According to the Tax Foundation, Kansas has one of the worst property tax burdens on small businesses in the nation. Kansas ranks nearly dead last on the property tax burden for both new and existing businesses!
- Property taxes are a major deterrent to capital investment and business expansion in Kansas. Now is the time for the Kansas Legislature to pass fundamental property tax reform to unlock the growth potential and prosperity of Kansas families and small businesses.
- According to a recent survey, over 66% of Kansans think that the current Kansas property tax system is unfair and should be changed. In 2014, let’s do something about this problem!
3. Reduce the Tax Burden on Farmers, Small Businesses and Home Owners by Repealing the Very Burdensome Kansas Mortgage Tax
- Kansas is one of only ten states that impose a mortgage tax on agricultural, commercial and residential property. Unfortunately, Kansas currently has the third highest mortgage tax burden in the entire Midwest region!
- The mortgage tax is collected at closing and must be paid by the buyer along with all the other fees and taxes required to purchase a property. On the purchase of a $150,000 home, the mortgage tax adds over $370 to the closing costs paid by the buyer.
- In addition to paying the mortgage tax, buyers must still pay various document recording fees to the county register of deeds to offset the costs of recording the deed, mortgage and other real estate documents. As a result, the mortgage tax is burdensome and does not offset the cost of any services or benefits provided to the buyer by the county.
- In 2012, over 105,000 Kansas farmers, small businesses and home owners were forced to pay nearly $47 million in mortgage taxes and nearly all of these funds are deposited directly into county general funds. In addition, there is absolutely no requirement that any of these funds be spent on housing or to provide services to property owners.
- Since nearly all of the funds generated by the mortgage tax go to counties, repealing the mortgage tax would have absolutely no effect on the state general fund.
- Kansas families, farmers and small businesses currently have one of the highest mortgage tax burdens in the entire Midwest region. Now is the time for the Kansas Legislature to provide Kansans with relief from the mortgage tax!
The Kansas Association of REALTORS® (KAR) is the state’s largest professional trade association, representing nearly 8,000 members involved in agricultural, commercial and residential real estate for over 90 years.
REALTORS® are the only dedicated advocates for the 700,000 Kansas home owners and commercial property owners. We serve a very important role in creating economic growth and jobs and stimulating the Kansas economy.
REALTORS® are dedicated to working with our elected officials to create better communities by supporting economic development, a high quality of life and providing affordable housing opportunities while protecting the rights of private property owners.
