NMHC/NAA joined other real estate partners on a letter to the Treasury Department on June 5 regarding the new pass-through deduction, which was enacted as part of last year’s tax reform legislation. The letter requests that taxpayers be allowed to use the acquisition cost of a property following a like-kind exchange for purposes of fully utilizing the pass-through deduction.
Available through 2025, the new pass-through deduction enables a portion of pass-through business income to qualify for a 20 percent deduction, or a top effective rate of 29.6 percent. For taxpayers earning over $157,500 (single filers) and $315,000 (married couples), the deduction is limited to the greater of:
- 50 percent of the taxpayer’s share of aggregate W-2 wages paid by the business; or
- 25 percent of the taxpayer’s share of aggregate W-2 wages paid by the business plus 2.5 percent of the unadjusted basis of all qualified property.
The Act’s deduction for pass-through income should be a significant benefit to the multifamily industry, particularly because it allows owners to qualify based on 2.5% percent of unadjusted basis of qualified property.
Learn more about tax reform and the pass-through deduction here.
- Middle-Income Housing Tax Credit (MIHTC) Fact Sheet
- Joint Trades Coalition Letter on 199A Main Street Tax Certainty Act of 2023
- Treasury and IRS Issue Clean Energy Tax Credit Guidance
- Business Coalition Letter Regarding 199A
- NMHC and NAA Statement for House Committee on Ways and Means Field Hearing on the State of the American Economy: The South