NMHC/NAA are urging Congress and the Trump administration to swiftly pass technical corrections legislation or issue administrative guidance to address an unintended consequence from last year’s tax reform legislation impacting the depreciation period of existing apartment properties. Specifically, the law was intended to allow firms to choose whether to deduct business interest, but if they were to do so, they must depreciate the property for 30 years instead of 27.5 years.
Unfortunately, the legislative language was incorrectly drafted and could be read to only apply to properties placed in service after 2017. Under that interpretation, existing buildings that opt to deduct business interest would have to be depreciated over 40 years.
NMHC/NAA are making the case to policymakers that Congress never intended a 40-year depreciation period for existing buildings that wish to retain a full deduction for business interest.
More on how NMHC/NAA had successfully secured the 30-year depreciation option, as well as the potential impact of a 40-year depreciation period, can be found here.
- Real Estate Coalition Letter on ADS Tax Reform
- 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
- Top Lawmakers Meet with NMHC Members at 2018 Fall Meeting