By Aaron Mayer
Director of Sherbert Consulting and Moxie Investment Funds
Earlier this week, the Senate Finance Committee released 549 pages of proposed tax provisions in response to H.R.1, which the House passed in May. Highlights for the real estate tax credit industry include:
- Similar to H.R.1, affordable housing should be boosted. LIHTC would benefit from an increased 9% state credit ceiling and a reduced hurdle for tax-exempt bond financed projects (from 50% to 25%).
- The proposal would make the Opportunity Zone program permanent, with new designated zones beginning in 2027 and updated every ten years thereafter. Recognition of deferred gain for new investments would have an initial outside date of 12/31/33 and every ten years following; the deferred gain could also be incrementally reduced for each of the first six years the investment is held. New reporting requirements would apply.
- Though not as drastic as the House bill, there would still be significant changes to energy incentives, especially for solar and wind facilities which would have an earlier phase-out under 45Y and 48E. 45X would also have an earlier phase-out and termination. 25C, 25D, 30C, 45L, 45V, 45W and 179D would see early termination.
- The Finance Committee’s proposal would also make New Markets Tax Credits permanent. This departs from H.R.1 which did not address NMTC.
- Unfortunately, still no improvements to the historic rehabilitation tax credit.
Congress has set a goal of finalizing this legislation by July 4, so The Sherbert Group will continue to monitor the status.