NCSHA Lays Out Priorities for 2025 Tax Bill

NCSHA today submitted its recommendations for the large tax bill Congress is expected to consider next year in a letter to the House Ways and Means Republican “Community Development Tax Team.” The team, one of 10 established by Committee Chairman Jason Smith (R-MO), is tasked with studying tax legislative solutions related to affordable housing and community development, including how such solutions could be incorporated into legislation to extend tax cuts enacted in 2017 that are set to expire at the end of 2025.

NCSHA recommends — and will advocate aggressively for — a significant increase in resources to expand affordable for-sale and rental housing supply by building on the Housing Credit and Housing Bond programs, expanding their reach, modernizing their rules, and using them as models to develop new tools to meet the needs current programs are not designed to address.

Specifically, NCSHA calls on the Tax Team to remove Mortgage Revenue Bonds (MRBs) and multifamily Housing Bonds from the Private Activity Bond (PAB) volume cap for a five-year period and raise the cap on Housing Credit authority by at least 50 percent to provide states with the resources they need to substantively address the affordable housing crisis. NCSHA also urges the Tax Team to facilitate more efficient use of existing PAB authority by lowering the 50 percent test for 4 percent Housing Credit developments to 25 percent and optimizing carryforward PAB authority for affordable housing by allowing states to redesignate carryforward authority for housing purposes if a project for which carryforward authority was initially designated will not move forward.

In addition to expanding affordable housing resources, NCSHA presses the Tax Team to strengthen the Housing Credit by providing states greater flexibility to allow basis boosts in Housing Credit developments, closing the qualified contract loophole to prevent further early loss of properties from the affordable stock, and facilitating investment by Fannie Mae and Freddie Mac in rural Housing Credit properties by making a technical change to clarify that the government sponsored enterprises are not tax-exempt controlled entities.

To facilitate better use of Housing Bonds to support first-time home buyers and other lower-income owners, NCSHA urges the Tax Team to adjust MRB program rules by increasing the MRB financing limit for qualified home improvement loans, allowing MRBs to be used for refinancing loans, and repealing the MRB 10-year rule.

Lastly, NCSHA calls on the Tax Team to support enactment of the Neighborhood Homes Tax Credit to finance construction or substantial rehabilitation of affordable owner-occupied housing, revising the existing Neighborhood Homes Investment Act to make this program flexible enough to support home building everywhere states and the home builders with whom they partner see a need for it.

These priorities and other tax provisions NCSHA supports are mostly contained in the Affordable Housing Credit Improvement Act, Affordable Housing Bond Enhancement Act, Neighborhood Homes Investment Act, and several other bills NCSHA has endorsed.