Tax Legislation Uncertain as Shutdown Looms

Champions in Congress Looking for Any Opportunity to Advance Min 4% Tax Credit Rate in Year-End Tax Legislation

Last week the U.S. House of Representatives Ways and Means Chairman Kevin Brady (R-TX) introduced tax legislation that would renew expired tax provisions, make technical fixes to last year’s Tax Cuts and Jobs Act, provide incentives for retirement savings, and offer tax relief for natural disaster victims.

  • The tax package also includes a technical correction that would modify the general public use rule for multifamily Housing Bonds to clarify that there is an exemption for properties serving veterans.
  • It is unclear whether lawmakers will move forward with negotiations on this package in the lame duck or wait until the next Congress to consider tax legislation.
  • House Republican leadership intended to vote on the proposal last week, but it was ultimately postponed because a large number of representatives were absent and thus the package lacked the votes to advance.

Complicating matters is the fact that there is limited legislative time remaining this year and lawmakers’ top priority is finalizing fiscal year (FY) 2019 appropriations before the current continuing resolution (CR) funding many government functions expires on December 7. The President has said he will veto any spending package that does not include his requested funding for border security, which would result in a partial government shutdown.

As reported in a previous post this week, however, given former President George H. W. Bush’s passing over the weekend, congressional leaders agreed to a two-week CR during the week of national mourning. Despite an unclear path forward, our champions in Congress are looking for any opportunity to advance the minimum 4 percent Housing Credit rate and other provisions from the Affordable Housing Credit Improvement Act.

Year-End Tax Legislation Uncertain as Shutdown Looms

In November, Novogradac projected that more than 65,000 additional rental homes could be financed from 2019 to 2028 if a provision is enacted to establish a minimum 4 percent floor for low-income housing tax credits (LIHTCs) generated by tax-exempt private activity bonds issued for multifamily housing.

The proposal to establish a permanent 4 percent floor was overshadowed when the Affordable Housing Credit Improvement Act was first introduced in 2016, as the proposed 50 percent increase in low-income housing tax credit (LIHTC) allocation authority received most of the attention.

But the potential posed by a minimum 4 percent LIHTC floor, which would parallel the establishment of a 9 percent minimum rate that was enacted by the Protecting Americans from Tax Hikes (PATH) Act in Dec. 2015, should not be overlooked.

Novogradac Update

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