Congress Revives Expired Tax Extenders, Makes Other Key Tax Changes

Filed in Advocacy, Sustainability and Green Building by on December 17, 2019 4 Comments

This post was updated on Dec. 19.

In a victory for NAHB and the housing community, Congress has approved a package of tax changes that include a number of provisions sought by NAHB, including a series of temporary tax provisions known as “tax extenders.”

The tax extenders section of the bill contains a number of temporary tax items that expired at the end of 2017. The legislation retroactively reinstates in 2018 and 2019, and extends the following tax provisions through 2020:

  • 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. Offers a credit worth up to $500 (subject to a $500 lifetime cap), with lower caps for certain products, such as windows, for consumers to install qualified energy-efficient upgrades.
  • Mortgage Forgiveness Tax Relief. Eliminates any taxes home owners might face because of renegotiating the terms of a home loan, which result in forgiving or canceling a portion of the outstanding loan balance, particularly in connection with short sales. It applies only to principal residences.
  • 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.

The legislation also includes the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which passed the House earlier this year. The SECURE Act is intended to reduce the administrative costs of small businesses offering their employees retirement savings plans. The SECURE Act will give small businesses a more cost-effective tool to offer retirement benefits by combining their buying power in the form of Open Multiple Employer Plans.

The bill further provides temporary tax relief for individuals and businesses in federally declared disaster areas occurring between Jan. 1, 2018, and 30 days following the enactment of the legislation. These provisions allow certain early penalty-free withdrawals from retirement plans, provide an employee retention tax credit for employers, and offer automatic adjustments to tax filing deadlines, among other changes. The bill also includes a provision to provide additional low-income housing tax credit allocations related to certain 2017 and 2018 California disasters.

The tax package also repeals a provision related to certain employee transportation fringe benefits offered by non-profit organizations, including trade associations. The Tax Cuts and Jobs Act of 2017 imposed the corporate tax rate of 21% on the value of employer-provided transportation benefits, including parking, or certain other subsidy programs. The bill repeals that tax change for non-profit employers retroactively, which should allow non-profit entities to collect back any taxes paid in 2018.

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

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Comments (4)

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  1. Bill Rhoads says:

    Was the Congress approved bill signed by Trump into law?

  2. Brad Meade says:

    Will new homes need to be Energy Star Certified to qualify for the tax credit?
    Sec. 1332 Sec. 45L (c) (1) (B) <———
    (B) leads me to think they will

    • NAHB Now says:

      Section 45L provides for two tax credit amounts. The $2,000 tax credit is open to all housing types that meet the required heating and cooling energy targets based on the IECC. These include a dwelling unit that is certified have annual heating and cooling energy consumption which is at least 50 percent below the annual level of heating and cooling consumption of a comparable dwelling unit. The comparable dwelling unit is one constructed in accordance with the standards of chapter 4 of the 2006 IECC, including supplements. In addition, the heating and cooling equipment efficiencies must correspond to the minimum allowed under the Department of Energy. Finally, the unit must have its building envelope component improvement account for 1/5 of the 50 percent reduction in heating and cooling consumption. There is no mention of Energy Star in the statute with regard to the $2,000 credit.

      A separate $1,000 tax credit is available for manufactured homes that meet certain standards, one of which is meeting “the requirements established by the Administer of the Environmental Protection Agency under the Energy Star Labeled Homes program.” This is applicable only to manufactured homes qualifying for this lesser credit amount.

      NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers.

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