Good Time to Get Real Estate Tax Laws Right

All this election talk about changing Federal tax laws to make them simplier and fairer got me thinking about the major ones that involve real estate. Seems this is a great time to rethink the laws and right-size them to simplify them and to make them fair for all given the current economic climate.  I would delete some, modify others and add some new ones as follows:

Primary Residence Purchase Tax Credit (new) - Provide a 5% tax credit based solely on the purchase price of the property that gets amortized straightline over seven years while occupying the home.  Forget the one time tax credit used to motivate buyers a few years ago, let's make it based on the price of the home and require them to stay there to earn it.

Mortgage Interest Deduction (eliminate) - With interest rates as low as they are and the national median home price having declined significantly to $169,500 this law really doesn't provide much benefit to most homeowners.  It should be eliminated in favor of the one above.  Even those with higher mortgages see those deductions get limited currently.

Capital Gain Exlusion on Primary Residence (modify) - Never understood why those that buy a primary residence and sell it in the future for a gain have the luxury of getting a huge tax benefit by excluding up to $250,000 (individual) and $500,000 (married) of the gain at sale but those that suffer a loss get nothing.  Come on, who needs the help the most in a situation like this!  I'm not talking about rewarding anyone for a "paper loss" from escalating home values that then plummet.  No, but anyone that loses their hard earned cash used to buy a primary residence (reduced by any refi-cash out) should receive some assistance up to the same thresholds on the gain side.

Rental Property Rent Reporting Credit (new) - Renters should be allowed a 2% tax credit for reporting rent or lease payments made to the owner.  The reporting is without sharing of taxpayer ids but through property address.  This renter tax credit will be more than offset by the under reported rental/lease income received by owners.

Primary Residence Property Tax Credit (modify) - This is an itemized deduction like the mortgage interest deduction that needs to exceed a certain threshold before it provides any benefit to the taxpayer.  Forget that, this is a tax that has already been paid and should be a straight offset to computing taxable income.

Not being a tax law wizard myself, I'm sure there are many others that could receive a similar overhaul with the following objectives in mind: 1) meet reasonable tax revenue objectives; 2) match taxable event with the economic benefit/loss to the taxpayer; 3) stimulate the real estate market with a long-term approach; 4) eliminate loopholes; 5) create more transparency by better reporting and cross-checking.

Or we could go with the 9/9/9 plan or whatever simple plan our next presidential candidate dreams up!