On February 4, the House Ways and Means Committee passed a $77 billion bill that allows small businesses, including multifamily firms, to permanently write off up to $500,000 in qualifying investments in the year of purchase. This expensing limit would be phased down if overall investment costs exceed $2 million - ultimately, limiting the proposal to smaller multifamily operators. Without legislation, small businesses can in 2015 immediately deduct only $25,000 in investment costs.
The Committee’s action is the first step in what is likely to be a long process to once again renew dozens of tax provisions that Congress extended last December through 2014. Several of these benefit the multifamily industry, including so-called bonus depreciation, the flat 9 percent Low-Income Housing Tax Credit, incentives for energy-efficiency, and the New Markets Tax Credit.
While the full House is expected to consider the bill next week, the White House opposes enacting the legislation without a revenue offset. With that potential veto threat looming, it is likely that lawmakers will ultimately resort to their familiar pattern of waiting until later in the year to send the White House a package that addresses expired tax provisions for a period of just one or two years.