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Year-End Tax Bill Will Not Include Housing Credit Provisions

Published on December 17, 2019 by Jennifer Schwartz
Year-End Tax Bill Will Not Include Housing Credit Provisions

Just before midnight last night, congressional leaders released the text of a tax package intended to advance this week along with FY 2020 spending legislation released yesterday afternoon. NCSHA, HFAs, other Housing Credit industry allies, and our Senate and House Housing Credit champions had mounted a remarkable campaign to include provisions from the Affordable Housing Credit Improvement Act, S. 1703/H.R. 3077, and the Save Affordable Housing Act, S. 1956/H.R. 3479, in the legislation. Unfortunately, despite our best efforts, the final bill does not include Housing Credit provisions from these bills.

Earlier yesterday, our sources on the Hill reported that the 4 percent minimum Housing Credit rate for bond-financed properties had made it into the tax package on which negotiators were working. However, this and other provisions were stripped from the bill’s final version in the last hours of negotiation. It is our understanding that the decision to reduce the scope of the tax bill had nothing to do with the minimum rate provision, but rather that negotiators were unable to reach agreement on other aspects of the legislation and in the end fell back to what has been termed a “skinny package.”

One Housing Credit-related provision is included in the bill: increased Housing Credit authority for developments in qualified 2017 and 2018 presidentially-declared disaster areas in California resulting from wildfires, up to an amount equal to 50 percent of California’s 2017 and 2018 Housing Credit authority.

The bill extends until the end of 2020 certain expiring tax provisions, including the New Markets Tax Credit, for which it provides $5 billion in 2020; the exclusion from gross income of qualified principal residence indebtedness; and the treatment of mortgage insurance premiums as qualified residence interest. The bill also includes non-housing-related extensions of expiring tax provisions, additional disaster tax relief, and miscellaneous provisions. It does not include many of the technical corrections to the Tax Cut and Jobs Act (2017 tax reform) sought by Republicans or expansions of certain refundable tax credits sought by Democrats.