Now that the Senate has passed its version of tax reform, Republican leadership turns its attention toward the final step in making the Tax Cuts and Jobs Act the law of the land—reconciling the Senate bill with the House of Representatives bill.
Much of the two bills overlap, but with a razor-thin majority in the Senate that could get even thinner depending on how Alabama’s special election goes next week, Republican leadership will have to be mindful of how any deals to satisfy House members will play with the handful of moderate senators who made passage from Congress’ top governing body possible.
A number of tax issues related to housing and real estate are among the measures where the House and Senate will need to find common ground. The Historic Tax Credit, which has funneled $117 billion toward renovating more than 40,000 structures since 1981, is repealed in House bill but only slightly modified in the Senate bill; in the Senate bill, the credits must be claimed over 5 years instead of when the property is placed in service, as is current law.
The House bill also repeals the use of private-activity bonds, which account for as much as 60 percent of the affordable housing units built using Low-Income Housing Tax Credits. The Senate bill retains private-activity bonds.
On the mortgage front, the House bill caps the mortgage interest that can be deducted at $500,000 worth of loans, while the Senate bill retains the current $1 million cap.
Real estate lobbies and affordable housing advocates have been among the most vocal critics of the two bills. The National Association of Realtors and the National Association of Home Builders have previously expressed opposition to the bills, as well as multiple affordable housing organizations that believe the low-income housing tax credit is essential to combating escalating housing costs.
Here’s a rundown of all the bill’s measures that impact the housing community: