The apartment industry and a coalition of other real estate groups sent a letter to Congress on June 14 calling on lawmakers to reject further increasing taxes on carried interest. President Biden has proposed taxing carried interest at ordinary income rates for taxpayers earning over $400,000 as part of his American Families Plan. Representative Bill Pascrell (D-NJ) and Senator Tammy Baldwin (D-WI) have also introduced legislation to tax all carried interest at ordinary income rates.
NMHC strongly opposes modifying the tax treatment of carried interest and the devastating impact it would have on the development of multifamily housing and on housing affordability throughout the nation. We continue to make the case that this proposal should not be used to offset the cost of legislation.
Carried interest should receive capital gains tax treatment because it represents a return on an underlying, long-term capital asset, as well as risk and entrepreneurial activity. This is in contrast to any fees that managing partners receive in payment for operations and management activities, which are taxed as ordinary income.
For more information on NMHC’s ongoing advocacy work in this space, please visit our tax and accounting webpage.
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