NAHB Supports Final Tax Bill

Filed in Capitol Hill by on December 16, 2017 20 Comments

thimbs up

House and Senate conferees have produced a final conference report on the Tax Cuts and Jobs Act, tax reform legislation that will be voted on by each chamber next week.

After significant improvements made during the legislative process, and due to the robust engagement efforts of NAHB and its membership, NAHB supports this final tax bill.

We believe it will help middle-class families, maintain the nation’s commitment to affordable housing and ensure that small businesses are treated fairly relative to large corporations. Lower tax rates and a fair tax code will spur economic growth and increase competitiveness, and that is good for housing.

An overview of the Tax Cuts and Jobs Act, with all changes taking effect for the tax year starting Jan. 1, 2018:

  • Mortgage interest deduction. Retains the mortgage interest deduction and the deduction for second homes, but reduces the mortgage interest cap from $1 million to $750,000.
  • State and local property taxes. Allows taxpayers to deduct up to $10,000 of state and local taxes, including property taxes and the choice of income or sales taxes.
  • Capital gains exclusion. Maintains existing law that allows home owners to exclude up to $250,000 (or $500,000 for married couples) in capital gains on the profit from the sale of a home if they have lived in the house for two of the last five years.
  • HELOC. Eliminates the deduction for interest on home equity loans.
  • Private activity bonds. Retains private activity bonds (PABs), which will enable the Low Income Housing Tax Credit to maintain its effectiveness as the most indispensable tool for the production of affordable housing. Without PABs, we would face the loss of more than 788,000 affordable rental units over the next decade.
  • Alternative Minimum Tax. Eliminates the Alternative Minimum Tax (AMT) for corporations and increases the AMT exemption amounts and phase-out thresholds for individuals.
  • Individual tax brackets. Retains seven tax brackets, with rates ranging from 10% to 37%. This will provide tax relief for individuals and small businesses and represents a tax cut for most taxpayers.
  • Estate tax. Doubles the estate tax exemption.
  • Carried interest. Retains existing carried interest rules, but assets must be held for three years.
  • Pass-through deduction. Allows most taxpayers with pass-through income to deduct 20% of that income based on wages or on wages plus a capital element.
  • Business interest deduction. Provides the taxpayer a choice of making a one-time election for a deduction limited to 30% of adjusted gross income; or for real estate, a 100% deduction for business interest, but with certain trade offs.
  • Like-kind exchanges. Preserves the benefit for real estate investors to make tax-free exchanges of property, commonly referred to as “like-kind” exchanges.
  • Multifamily depreciation. Gives the taxpayer the choice of taking 27.5- or 30-year depreciation, depending on how they elect to treat their business interest.
  • Individual tax provision sunsets. Almost all individual tax elements – mortgage interest, state and local property taxes, individual brackets, etc. – expire at the end of 2025. Unless Congress acts, starting in 2026 these modifications will revert back to the tax code as it exists today in 2017.

NAHB was at the forefront of the tax reform debate and we earned clear victories on the real estate exception to the business interest deduction, second homes, private activity bonds, the capital gains exclusion, and many other provisions.

We are urging the House and Senate to move swiftly to pass the legislation. It is expected that both chambers will approve the bill during the week of Dec. 18 and get the legislation to President Trump’s desk before Christmas.

For more information, contact J.P. Delmore at 800-368-5242 x8412.

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Comments (20)

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  1. Many thanks to our Sr. Officer team and staff for staying on top of this very important issue and seeing it to a positive outcome. Please stay on this until it is sighed into law!

  2. Peter Lawton says:

    Can you address the impact this will have on our children’s debt?

    • LD says:

      $1.4 trillion over TEN YEARS (key to remember, a lot of people don’t realize that) is the last number I saw, that’s $140 billion per year or about 3-3.5% of the current budget. Therefore it’s pretty small in the grand scheme. So it’s important to look big picture ie. the next major legislation is going to be about debt deceleration and economic sustainability. From what I hear there was a target of $1.5t which was a compromise between the two factions, the debt hawks and those who desire massive tax cuts.

      National debt appears to be the main priority for next year, that is “entitlement reform”
      entitlements are non-discretionary spending aka what the federal government is required by law to spend. It makes up about 70% of the federal govt. (there is a lot of manipulative stuff on the internet that tries to scheme people into thinking otherwise) That is growing rapidly in both $ and % or share of the total budget. It’s incredibly unsustainable. Thus, statically, the only way to address the national debt is through entitlement reform, it’s politically very unpopular and easily preyed upon by political opponents so their is a major incentive to put it off but it’s inevitable. So if you think there was a lot of kicking and screaming this year, buckle up because the children are going to be throwing fits next year!

      I hope anyone that read’s this found it helpful!

  3. Ray Hackman says:

    Great work and greatly appreciated!!!

  4. Steven Rieger says:

    Can you address the impact this legislation will have in high tax states? As a New York builder, I can only anticipate strong headwinds, both in the short and long term, from the limits on deductibility of State and local taxes.

  5. jake says:

    You forgot to mentions that DPAD is going away. This will have a substantial impact on New Construction builders. I feel like this should be mentioned in your summary.

  6. Lori says:

    Taking away the interest deduction on second mortgages will hurt the remodeling industry.

  7. Jim Guffey says:

    You have any idea how we will pay for the 2 Trillion in additional Federal debt that this bill will probably create? And if you claim it will create enough jobs and tax income to offset the tax cuts you obviously have not researched this well. Never in this Country’s history or any others has this approach worked. The US is wallowing in debt and by every reasonable professional opinion this will make it worse.

  8. Bill Ryan says:

    Eliminating a couple of negatives, or lessening their effects, is not a basis for endorsement. Like a few Senators, they BOUGHT your support without earning it.

  9. Anthony Grisanti says:

    2 weeks ago your president said this bill will cause housing prices to plunge 10% –what has changed so significantly for you to endorse. And can’t you see the incentive to own is destroyed in this bill —Mortgage interest deduction fades but property taxes will rise -This bill will crush housing especially the second home market —

  10. Murray Rust says:

    This bill will be great for stock values as Corporations will have more money for dividends and stock buybacks. That’s where the windfall will go not to hiring new employees or to stimulate the economy.It’s bad for housing as it limits the MID and especially because it puts a lid on the local tax deduction thereby depressing housing values. The effect on the deficient is serious. We are passing a big bill to our kids which is highly irresponsible.
    Don’ t see how NAHB rationalized supporting a bill that’s terrible public policy and a step backward for the Country.

    • Peter Lawton says:

      Couldn’t agree more – everyone is looking short term and not thinking of making long term intelligent decisions
      Increasing debt to make money today is simply not sound

      • It would be much more sound if tax cuts, in whatever form, were simplified as a priority, cutting down on record-keeping expenses, and especially if cuts were balanced by immediate and equal cuts to federal spending. Then, with an immediately revenue neutral plan any growth that comes of the tax cuts we can consider a bonus.

        I am also skeptical of why corporates will invest in capex with additional tax expense reductions considering they could access debt at extremely low rates. If there were opportunities, wouldn’t they have already invested in them? Now corporates are looking at interest rates rising, gradually neutralizing the effects of planned tax expense reductions.

        I think we’ll be in a larger debt hole because of this plan and large and increasing debt burdens are never good for growth.

  11. Hans Lampart says:

    wow, I am amazed that you/we would support this ridiculous bill. Those of us with pass thru income will obviously do better but how does this benefit anyone that actually needs help, ie homeowners?

  12. It would be interesting to know how much money you contributed to the Republicans and the party just to get a piece of trash that this bill represents. You’ve been had!!!!

  13. Tony Danzo says:

    The NAHB supporting this bill is like a framer using a chainsaw to cut stair horsws, in other words ridiculous! As many above have said it will kill the remodeling and additions market which is now booming. Then how will be able to pay our annual dues?

  14. Hugh Perlman says:

    Shame on you!!! This bill is heartless, like the rest of the Trump agenda. It can’t help but hurt our business in the long term.

  15. J says:

    I thought the reform was going to leave the $250,000/$500,000 capital gains exclusion but change it from 2 of 5 to 5 of 8, can you please clarify?

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