As the Administration and Congressional Republicans prepare to release additional tax reform details next week, NMHC/NAA continues to remind lawmakers about the multifamily industry’s key tax reform priorities. The apartment industry recently submitted a statement for the record for a Senate Finance Committee hearing on business tax reform. Additionally, NMHC President Doug Bibby published a tax reform op-ed in The Hill, a Capitol Hill newspaper widely read by policymakers.
Currently, the level of detail that the the so-called “Big 6” negotiators, who represent the Trump Administration and House and Senate Republicans, will release next week is unclear. More specifics may be provided on the direction lawmakers are heading for in regardsto lowering tax rates and spurring capital investment. What is less certain is how these tax changes will be paid for, including the possibility of curtailing business interest deductibility, like-kind exchanges, or the availability of lower tax rates to a portion of business income earned by pass-through entities (e.g., LLCs, partnerships, and S Corporations) that dominate the multifamily industry.
Once the “Big 6” release additional details, the House Ways and Means and Senate Finance Committees will play a significant role in determining legislative specifics. In fact, Chairman Hatch (R-UT) indicated at the September 19 hearing that the Finance Committee “is going to consider tax reform through regular order.”
As policymakers deliberate, NMHC/NAA continue to press for the multifamily industry’s key priorities, including our view that any tax reform proposal must:
- Protect pass-through entities from higher taxes or compliance burdens;
- Retain the full deductibility of business interest;
- Ensure depreciation rules avoid harming multifamily real estate;
- Preserve the ability to conduct like-kind exchanges;
- Maintain the current law tax treatment of carried interest;
- Preserve and strengthen the Low-Income Housing Tax Credit;
- Maintain the current law estate tax; and
- Repeal or reform the Foreign Investment in Real Property Tax Act to promote investment in the domestic apartment industry.
To pass tax reform legislation by the end of the 2017 or the early part of 2018, Congress must first pass a budget resolution. In the Senate, where Republicans have a narrow 52-48 majority, lawmakers would like to use the reconciliation process, an approach that would enable them to pass a tax reform bill with only 51 votes. To trigger reconciliation, however, Republicans must pass and conference a budget resolution through both the House and Senate.
The House has so far been unable to move a budget resolution, though leaders hope the chamber will act in October. Progress has slowed because members would first like additional details on tax reform. Additionally, some members oppose the current version of the House Budget resolution that would reduce entitlement spending by $203 billion over 10 years, an amount viewed as too high by moderate Republicans. Meanwhile, the Senate Budget Committee continues to work toward a markup either later this month or in early October.
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- Real Estate Industry Continues to Press for 30-Year Depreciation Period for Multifamily Buildings
- End-Of-Year House Tax Bill Includes Beneficial Provision But Lacks Depreciation Fix
- House Votes to Make Permanent Tax Cuts for Pass-Through Businesses