NMHC/NAA are urging Congress and the Trump administration to swiftly pass technical corrections legislation or issue administrative guidance to address an unintended consequence from last year’s tax reform legislation impacting the depreciation period of existing apartment properties. Specifically, the law was intended to allow firms to choose whether to deduct business interest, but if they were to do so, they must depreciate the property for 30 years instead of 27.5 years.
Unfortunately, the legislative language was incorrectly drafted and could be read to only apply to properties placed in service after 2017. Under that interpretation, existing buildings that opt to deduct business interest would have to be depreciated over 40 years.
NMHC/NAA are making the case to policymakers that Congress never intended a 40-year depreciation period for existing buildings that wish to retain a full deduction for business interest.
More on how NMHC/NAA had successfully secured the 30-year depreciation option, as well as the potential impact of a 40-year depreciation period, can be found here.
- NMHC/NAA Request Taxpayers Get Full Value of Pass-Through Deduction
- Apartment Industry Reminds Ways and Means Committee of Tax Reform Regulatory Priorities
- Apartment Industry Statement on Tax Reform to House Ways and Means Committee
- Apartment Industry Calls on Congress to Clarify Tax Reform Rules
- Apartment Industry Statement for the Record Regarding the Senate Finance Committee’s Hearing, Early Impressions of the New Tax Law