Senate Finance Committee Chairman Charles Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) have introduced the Tax Extender and Disaster Relief Act of 2019, NAHB-supported legislation that would reinstate and extend key housing tax provisions through Dec. 31, 2019.
Of note to the housing community, the legislation addresses what is known as the “tax extenders,” a series of temporary tax provisions that expired at the end of 2017. The bill would retroactively reinstate in 2018 and extend the following expired tax provisions through 2019:
- Deduction for Mortgage Insurance. Allows taxpayers, subject to an income cap beginning at $100,000, to deduct premiums paid for private mortgage insurance and FHA/RHA/VA insurance premiums.
- Section 45L Tax Credit for Energy Efficient New Homes. Provides builders a $2,000 tax credit for the construction of homes exceeding heating and cooling energy standards by 50%. The base energy code is the 2006 International Energy Conservation Code plus supplements. Builders must have tax basis in the home to claim the credit (i.e., they must own and then sell/lease the residence).
- Section 25C Tax Credit for Qualified Energy Efficiency Improvements. This policy offers a credit worth up to $500 (subject to a $500 lifetime cap), with lower caps for certain products, like windows, for consumers to install qualified energy-efficient upgrades.
- Section 179D Energy Efficient Commercial Buildings Deduction. Provides a deduction of up to $1.80 per square foot for commercial and multifamily buildings that exceed specific energy efficiency requirements under ASHRAE 2007.
- Mortgage Forgiveness Tax Relief. The provision eliminates any taxes home owners might face due to renegotiating the terms of a home loan, which result in forgiving or canceling a portion of the outstanding mortgage, particularly in connection with short sales. It applies only to principal residences and is extended until Jan. 1, 2020
The Section 25D tax credit, which offers a 30% tax credit for the installation of qualifying alternative energy equipment, remains in effect. However, the 25D credit is being gradually phased out and will expire starting in 2022.
The legislation also provides temporary tax relief for victims of most major natural disasters that occurred after Jan. 1, 2018.
For more information, contact J.P. Delmore
at 800-368-5242 x8412.