Senate Panel Approves NAHB Priorities as Part of Tax Extenders Package

Filed in Advocacy by on July 21, 2015 0 Comments

3 D a picture with the image of smile percent. An ideal illustration of cheerful sale or the big reduction of prices. " The ridiculous prices "The Senate Finance Committee today voted 23-3 to renew scores of temporary tax provisions known as tax extenders that expired this year, including all those of interest to the housing community. In general, the provisions are granted a two-year retroactive renewal through the end of tax year 2016, dating back to the start of 2015.

Key provisions in the tax extenders package include:

  • Section 45L tax credit for energy efficient new homes. Provides builders a $2,000 tax credit for exceeding energy standards by 50%. The base energy code is the 2006 International Energy Conservation Code plus supplements. Section 45L is expected to save home builders approximately $380 million annually in taxes for 2015 and 2016 construction activity.
  • Fixed credit rate for 9% and a few 4% low-income housing tax credit (LIHTC) projects. The bill will renew the 9% fixed rate for 2015 and 2016 allocations. In a step forward for multifamily developers, it also will now include a fixed 4% LIHTC rate when used to purchase and improve existing properties that are not federally subsidized or financed with tax-exempt bonds. The 4% fixed rate also requires the property to be placed in service after the date of enactment for credit allocations made before Jan. 1, 2017.
  • Section 25C tax credit for qualified energy efficiency improvements. This is a 10% tax credit subject to a $500 lifetime cap, with lower caps for certain products like windows, for consumers to install qualified energy efficient upgrades. The extension of 25C will now make eligible all roofing materials meeting the Energy Star guideline and also updates standards for hot water heaters, biomass fuel stoves, oil hot water heaters and doors and windows. Remodelers often leverage 25C tax credits when working with clients. Section 25C is expected to save home owners who remodel almost $700 million annually in taxes for 2015 and 2016 improvements.
  • Section 179D energy efficient commercial buildings deduction. Provides a deduction up to $1.80 per square foot for commercial buildings, including multifamily buildings built under the commercial code, that exceed specific energy efficiency minimums.
  • Section 163 deduction for mortgage insurance. Allows taxpayers, subject to an income cap, to deduct premiums paid for private mortgage insurance and FHA/RHA/VA insurance premiums. The deduction for mortgage insurance is expected to save home owners more than $1.1 billion per year for tax years 2015 and 2016.
  • Bonus depreciation. Extends the 50% bonus depreciation through 2016.
  • Section 179 expensing. Increases the maximum expensing amount to $500,000 for qualified property on up to $2 million in property placed in service.
  • Mortgage forgiveness tax relief. The provision would eliminate any taxes home owners might face from banks when renegotiating the terms of a home loan and forgiving a portion of the outstanding mortgage. This would apply only to principal residences and through the 2016 calendar year.

Also of note, the measure includes additional reporting requirements for mortgage interest that would allow the IRS to better enforce the existing rules for claiming the mortgage interest deduction.  Currently, mortgage lenders report to the IRS the borrower’s mailing address, taxpayer identification number and mortgage interest paid.  Under this provision, lenders would be required to include the physical address of the property as well as the mortgage balance. These new rules would allow the IRS to better enforce the $1 million acquisition debt limit, the $100,000 home equity loan limit and the second home rule.

The House has not yet moved on renewal of the extenders. Final resolution of the extenders is not expected to occur until later this year.

For more information, email J.P. Delmore or Robert Dietz at NAHB or call J.P. at 800-368-5242 x8412 or Robert at x8285.

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