NMHC/NAA submitted a statement to the House Ways and Means Committee calling on Congress to clarify provisions in last year’s tax reform bill pertaining to issues such as depreciation and the new 20 percent tax deduction for pass-throughs. The statement follows similar letters to the Senate Finance Committee and Treasury Secretary Steven Mnuchin.
Among other issues, the apartment industry’s statement requests that Congress either pass technical corrections legislation or that the Trump administration swiftly issue administrative guidance to address an unintended consequence from last year’s tax reform legislation that impacts the depreciation period of apartment properties in existence prior to 2018. The law was intended to allow firms to choose whether they would like to deduct business interest. And if they were to do so, they must depreciate the property for 30 years instead of 27.5 years. However, due to a mistake in the legislative language, the law can be read to only apply to properties placed in service after 2017.
Because of the drafting error in the statute, existing buildings that opt to deduct business interest would have to be depreciated over 40 years. NMHC/NAA continue to make the case to policymakers that Congress never intended a 40-year depreciation period.
More information on tax reform can be found here.
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