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September 3, 2015
David Ho, Chair

The Credential
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Legislative
Senate Committee Approves Bill with 9% Fixed-Rate Floor

The Senate Finance Committee approved, by a vote of 23 to 3, a bipartisan tax extender bill which would renew most of the expired tax provisions for 2015 and 2016. The bill would restore the 9% credit rate floor for allocations made in 2015 and 2016.

It would also fix the 4% credit rate for acquisition of existing housing that is not federally subsidized — this includes existing housing that is financed by tax-exempt bonds, making those units ineligible. 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. While the 4% credit fix is relatively narrow in scope, which was intended to keep the cost low, it helps us establish a foothold to advance our broader efforts to expand and make these fixed credit floors permanent.

The bill also would extend two useful business tax provisions. It would extend the 50% bonus depreciation through 2016, as well as the higher Section 179 expensing limits. The bill would increase the expensing limits to $500,000 for qualified property up to $2 million in property placed in service. In addition, it extends a number of energy-efficient tax provisions long supported by NAHB.

Politically, it remains unclear what the next steps are for this package. The Senate is unlikely to consider tax extenders before the Fall, and the House also has indicated that extenders would be a Fall priority. Unfortunately, the most likely scenario is a repeat of 2014, where a final extender package is done at the end of 2015. NAHB will continue to push for quick action.

 

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