This week, Senate Finance Committee Chairman Max Baucus (D-MT) released three staff discussion drafts to overhaul portions of the tax code related to depreciation, the taxation of multinational businesses, and tax filing and fraud prevention. The depreciation proposal would have a significant negative impact on the cost recovery of multifamily buildings, while the international proposal would relax FIRPTA rules that act as a barrier to foreign investment. The details of both these proposals can be reviewed here. Chairman Baucus released each of his three proposals in legislative form, but the Finance Committee staff has emphasized the provisions are drafts.
No legislative action in the Senate has been planned, but NMHC/NAA are actively expressing concern over the cost recovery proposals. We are also concerned about his goal of using revenues raised to reduce corporate tax rates. The overwhelming majority of multifamily properties are held by so-called flow-through entities that pay business taxes under the individual income tax system. As a result, our opposition to being asked to finance corporate tax reductions will continue. House Ways and Means Chairman Dave Camp (R-MI) also appears to have deferred panel action on comprehensive tax reform legislation he is drafting, but there is a possibility legislative language could be released in December.
In a win for multifamily, on Nov. 20 Chairman Camp indicated that he does not plan to further modify estate tax laws as part of reform legislation. NMHC/NAA strongly support the current estate tax system that provides for a $5.25 million exemption, 40 percent top rate, and retention of stepped-up basis rules.
- 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