Tax Package Makes Permanent 9 Percent Minimum Housing Credit Rate
Late December 15, Speaker of the House Paul Ryan (R-WI) unveiled tax extender legislation, the Protecting Americans from Tax Hikes Act of 2015, that would renew and make permanent some of the expired tax provisions, including the 9 percent minimum Housing Credit rate, and extend for either five years or two years other expired tax provisions. The bill—a major victory for NCSHA and other Housing Credit industry stakeholders—is the result of weeks of negotiations among leaders of both parties and both chambers.
We expect the House to vote on the bill either Thursday or Friday of this week and to separately consider within the same timeframe the omnibus spending bill Ryan also announced last night. The Senate will then combine the two bills for consideration soon thereafter. Both chambers are expected to pass the measures.
Congress first temporarily created a 9 percent minimum Housing Credit rate in the Housing and Economic Recovery Act of 2008, and has since extended it two times. However, the minimum rate effectively expired at the end of 2013. Congress passed tax extender legislation at the end of 2014, retroactively extending the temporary minimum 9 percent Credit rate for 2014. This retroactive extension provided no practical benefit for the Housing Credit program because Housing Credit allocating agencies had already allocated their 2014 Credits by the time Congress passed the bill.
The 9 percent minimum Housing Credit rate will provide greater predictability and simplicity in underwriting and give states the discretion to provide more Housing Credit equity to individual developments, should it be needed for financial feasibility.
The tax extender legislation Congress is poised to pass would make the 9 percent minimum rate a permanent part of the tax code, beginning January 1, 2015.
The bill does not contain a 4 percent minimum Housing Credit rate for acquisition, for which NCSHA has also advocated. NCSHA will continue to seek opportunities to enact a 4 percent minimum Credit rate and advance the rest of our Housing Credit priorities.
The tax extenders bill also extends the New Market Tax Credit through the end of 2019 and the deduction for private mortgage insurance premiums paid or accrued in 2015 and 2016.
Contact NCSHA’s Jennifer Schwartz with questions.