By Matthew Berger, VP of Tax, Student Housing
Matthew M. Berger is Vice President of Tax and Vice President of Student Housing. In his tax role, Matthew represents the interests of the multifamily industry before Congress and federal agencies on tax issues.
Senate Democrats were working to include two tax proposals harmful to the multifamily industry to offset potential reconciliation legislation this week. If the proposal moved forward, it would have:
- Applied a 3.8 percent net investment income tax to active income—bringing impacted taxpayers’ (including many NMHC members) capital gains tax rate to 23.8 percent with a top marginal ordinary income rate of 33.4 percent.
- Limited the ability of non-corporate businesses to deduct losses.
In response, NMHC met with countless members of Congress and joined a broad coalition of nearly 200 organizations in sending an opposition letter to Congressional leaders warning them of the detrimental impacts the proposals would have on the housing and business communities.
NTIA is expected to establish program parameters throughout early 2022 and ultimately distribute the funding to states and territories. NMHC will monitor implementation of the program and ensure that multifamily properties receive the resources needed to bridge the digital divide in affordable and low-income multifamily housing communities across the nation.
Why the Tax Provisions Matter
Many multifamily participants would have seen tax increases if Senate Democrats reached an agreement on a reconciliation bill that included the two tax provisions above. The 3.8 percent surtax on active investment income would have reduced the ability of developers to reinvest funds into building and rehabilitating apartments. Imposing limitations on the deductibility of losses would have made it harder to weather the next economic downturn.
Reconciliation Remains in Flux Leaving Next Steps Uncertain
Senate Democrats continue to work on crafting a reconciliation package that can garner enough vote to pass in the House and Senate. At this point the focus is on healthcare provisions that would limit Affordable Care Act premium increases and enable Medicare to negotiate drug prices.
As events progress, NMHC will continue to oppose any onerous tax provisions that may be brought back into the fold.
- 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
- NMHC Advocates for Tax Policy as Solution to Housing Affordability Crisis