This post was updated on June 21.
On June 20, the House Ways and Means Committee approved legislation by a party-line vote of 25-17 that would provide a retroactive renewal and extension for many NAHB housing tax priorities. H.R. 3301, the Taxpayer Certainty and Disaster Tax Relief Act of 2019, addresses what is commonly known as “tax extenders,” a series of temporary tax provisions that expired at the end of 2017.
Introduced by Rep. Mike Thompson (D-Calif.), this bill would retroactively extend all of the expired key housing tax provisions for 2018 and extend them through Dec. 31, 2020. This is one year longer than the bipartisan bill introduced earlier this year in the Senate.
Of note to the home building community, the following provisions are included in H.R. 3301:
- 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.
In addition, the bill would provide disaster relief, including additional low-income housing tax credits for the 2017 and 2018 disasters in California. NAHB is pleased to see the committee recognize the effects disasters have on affordable housing. We strongly support providing additional low-income housing tax credit allocations when natural disasters result in a loss of affordable rental housing.
The Low-Income Housing Tax Credit is the most effective mechanism for producing new, affordable rental housing units, but it lacks the resources to keep up with the current demand, much less replace units lost unexpectedly due to a natural disaster. NAHB is recommending the committee consider other recent natural disasters with significant loss of housing and further expand the scope of eligible states.
Traditionally, tax extenders have not been paid for as they are considered extension of current tax policy. This bill breaks precedence by moving to pay for the tax extenders package by rolling back positive changes to the estate tax that were included in the Tax Cuts and Jobs Act. NAHB is concerned that this would negatively affect family-owned businesses, and we are urging Congress to find another way to help offset the costs of the extenders package.
For more information, contact J.P. Delmore
at 800-368-5242 x8412 or David Logan