Tax Reform Advances on Capitol Hill

Filed in Capitol Hill by on November 17, 2017 5 Comments

step upThe House on Nov. 16 passed The Tax Cuts and Jobs Act, tax reform legislation opposed by NAHB because of its detrimental effects on the housing market and middle-class families. Late that evening, the Senate Finance Committee advanced its version of tax reform legislation that NAHB believes is better for the housing sector.

However, like the House bill, the Senate tax plan fails to provide a meaningful incentive for homeownership for the middle class.

NAHB will continue to work with Congress on tax policy and other areas to ensure that housing and homeownership remain a national priority. Enacting meaningful tax reform that will help the middle class and small businesses is vital to keep the housing market moving forward and to create job and economic growth.

The Senate tax plan does contain positive elements for housing. It would protect important provisions to boost the production of affordable housing, including the Low-Income Housing Tax Credit and the tax-exempt bond program.

The Senate package would also provide sufficient tax reductions for small businesses to enable them to remain major drivers of job growth and maintain a level playing field with large corporations.

Earlier in the week, more than 50 leaders from across the NAHB Federation held 150 meetings with House and Senate lawmakers as your association continued to press the case for affordable housing, tax relief for small businesses and middle-class homeownership incentives in tax reform legislation being considered by both chambers.

Over two days of meetings, these home builders, developers, remodelers and their trade partners discussed the preservation of tax credits to spur the construction of more affordable housing, provisions ensuring small businesses are not at a competitive tax disadvantage to corporations, and the importance of preserving incentives that encourage the growth of homeownership, particularly among middle-class families.

NAHB remains engaged and will fight for the interests of the housing community as the legislative process moves forward,

 

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  1. Bill Camp says:

    Without reading through the entire tax reform legislation, my question is this.

    Is there any changes to the capital gains tax on the sale of a property.

    Thank you,

    Bill

    • NAHB Now says:

      There are changes to the capital gains exclusion rule. Under current law, homeowners can exclude from their taxable income up to $250,000 in capital gains ($500,000 for married couples) on the sale of their primary residence if they lived in it for two of the past five years.
      The House bill would require homeowners to live in their home for five of the past eight years before a sale to qualify for the exemption. In addition, under the House bill, the capital gains exemption phases out for single tax filers with incomes over $250,000 and married couples with incomes above $500,000. The income phase out is dollar-for-dollar. For example, if a single filer earned $300,000, they could only exclude up to $200,000 in capital gains on the sale of their primary residence.
      The Senate bill would also increase the live-in time period from the current two out of five years to five out of the last eight years. The Senate legislation also provides for some exceptions to this time requirement, such as if a seller is leaving due to a change jobs or health care.
      Under both the House and Senate bills, taxpayers can only use the capital gains exclusion once every five years.

      • Ken Olson says:

        How will new capital gains exemption of 5 out of 8 years of proposed tax law effect someone in my position who has already qualified for capital gains exemption of 2 out of 5 years under current tax law and is currently selling their principal residence and moving into new house? I’m sure there are many of us near retirement in this same position. I’m against new tax law just because of this change. Many of us in my age group (55-70) vote too.

  2. B Desjardins says:

    Can you address the proposed limits on tax deductions on mortgage interest, property taxes and state income taxes? Also are investment properties being handled differently?

    • NAHB Now says:

      In the House bill, mortgage interest is capped at $500K for new home purchases. If you currently own a home, it is grandfathered in at the $1M cap. The House bill also eliminates deductions for state and local income taxes, but allows property tax deductions up to $10K.
      The Senate bill:retains the mortgage interest deduction cap at $1 million and the mortgage interest deduction for second homes (eliminated in House version). The Senate plan would eliminate deductions for state and local income taxes, including property taxes.

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