Late on January 1, 2013, the House and Senate agreed on a tax package, The American Taxpayer Relief Act of 2012, H.R. 8, along with averting the fiscal cliff, includes an extension of the 9% Housing Credit floor for projects allocated by the end of 2013. The package prevents income taxes from increasing on those earning less than $450,000, ends tax breaks for top earners, delays sequestration for two months, continues expanded unemployment benefits for one year, and includes a number of other tax extenders.
Among the tax extenders are several other provisions of particular interest to the affordable housing and community development community:
two additional years of New Markets Tax Credit allocations at $3.5 billion annually,
an extension of the ability to exclude discharged mortgage debt from taxable income, and
an extension of the ability to deduct the cost of mortgage insurance on a qualified personal residence from taxable income.
Click here to learn more about the ACTION Campaign.
Click here for a summary of the American Taxpayer Relief Act.
Click here for the Joint Committee on Taxation’s estimated revenue effects on H.R. 8.
The extension of the 9% Housing Credit floor is a major achievement for the ACTION Campaign. But there are still challenges ahead in 2013, both in protecting the Housing Credit in tax reform and in extending the 9% floor permanently.
Many members of Congress have urged an approach to corporate tax reform that would involve eliminating or severely cutting as many as credits and deductions as possible; any credit or deduction would have to be newly justified, along with its corresponding tax increase.
The campaign coalition will regroup in 2013 to develop a strategy to both protect the credit in tax reform and to extend the 9% floor and institute a similar floor for 4% allocated credits on a permanent basis.
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