Senate Approves Tax Reform Bill

Filed in Capitol Hill by on December 2, 2017 25 Comments

Senate Republicans early this morning narrowly approved the Tax Cuts and Jobs Act (H.R. 1), legislation that would revamp the nation’s tax code.

While NAHB opposes the House-passed version of H.R. 1, the Senate bill represents a step in the right direction.

Unlike the House bill, the Senate tax reform package would:

  • Retain private activity bonds, a key tool for the production of affordable housing;
  • Keep the mortgage interest deduction cap at $1 million;
  • Retain the mortgage interest deduction for second homes; and
  • Exclude the punitive income phase-out proposed by the House as part of changes to the capital gains exemption from the sale of a primary residence.

NAHB was also successful in urging lawmakers to adopt an amendment to the Senate tax reform bill proposed by Sen. Susan Collins (R-Maine) that will allow home owners to deduct up to $10,000 in property taxes.

Moreover, the Senate bill brings more parity in how pass-through businesses and C-corporations are taxed, enabling them to maintain a level playing field with large corporations.

The legislation now goes to a House-Senate conference, where conferees from both parties will hammer out differences between the two bills. NAHB will be urging conferees to adopt most of the provisions in the Senate plan and to support any changes that will allow more families to achieve homeownership and rental housing opportunities.

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

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Comments (25)

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  1. Randy Melvin says:

    This timely, straight forward, summary of key housing linked provisions within the latest senate version of the tax bill, is greatly appreciated. Assuming for the moment these improvements in the senate version of the bill were to be approved by both houses and signed into law before the end of the year, when does NAHB currently understand they would take effect? Simply put, would they likely first impact 2018 or 2019 taxes? Thank you.

  2. Rick Driscoll says:

    I am most concerned about the time required to live in primary residence moving from two years to five years. Where do we stand on that right now?

    • NAHB Now says:

      Rick, both the House and Senate bills propose to increase the ownership period to qualify for the capital gains exclusion from 2 of 5 years to 5 of 8 years. In addition, the House bill would phase out the exclusion all together for taxpayers with incomes above $250,000 (single) or $500,000 (couple). We agree that increasing the ownership requirements is a negative change. And the income phase-out adds unnecessary complexity. But as both the House and Senate are in agreement to the 5-of-8-year change, retaining current law will be a difficult task.

      • Kevin says:

        What about those of us that have been in our primary residence for a year and a half and planned on selling mid 2018. Will we be grandfathered in under the 2 year rule since we built under that premise years ago? Or will we be under the 5 year rule?

        • NAHB Now says:

          Kevin,

          Unfortunately, neither bill would grandfather existing homeowners into the current law 2 of 5 year rule. I strongly encourage you to call your member of Congress and both Senators to make sure they hear not just from us, but directly from their constituents. NAHB will continue to fight to preserve the existing rules.

          • Kevin says:

            Thanks for your response. I will be calling them tomorrow. This is ridiculous. I fail to see how they think this change from 2 to 5 will benefit the overall funds being brought in to the government or stimulate the economy. It will have the opposite result and hurt some of us in the process. I am lost on who to vote for now.

      • Paul Valeri says:

        5 out of 8 years to escape taxation on sales of primary residence is the absolute worst impact on our industry. It takes an extra $100,000 plus out of the pockets of perhaps a million Baby Boomer house buyers looking to down-size.

        DEPlORIBLE in all respects that we don’t fight thus tooth and nail!!

        Paul Valeri
        Danbury & Bridgewater, CT

      • Rick Driscoll says:

        It should be brought to the lawmakers’ attention that turnover of real estate generates huge economic benefits, not only the transactions of goods and services but the increased tax revenue base by all trades involved. If one builds and sells two homes in a five-year period it seems obvious that that the economic benefits would be doubled.

        Please have our lobbyists emphasize this!

  3. Norm says:

    At least the title of the bill does not include “Reform.” To be more accurate, the title should include, “and Deficit Increase Bill.”

  4. Chris says:

    Norm, I’ll assume you were just as concerned with the “Affordable Care Act” as with the title of this legislation. Have you voiced your opposition to the deficit over the last eight years? With rates increasing and the debt doubled, the debt service will soon be 400% of the debt service when BO took office.

    • Norm says:

      Yes, I’ve voiced concern about the deficit. But suppose I hadnt–does that justify this challenge to the deficit?

    • CT says:

      agreed, 1.4 trillion over ten years in relatively small. That’s only about 3-3.5% of the federal budget. Thus why this is more about tax reform than cuts. It seems to me like there was compromise between the deficit hawks and those advocating big tax cuts, deciding that a target of 1.5 trillion was good compromise between debt (revenue neutral tax reform) and tax cuts.

      For comparison Obama’s stimulus added almost $1 Trillion in one fell swoop. This tax bill only sounds large because it’s over 10 years.

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