December 15, 2017

Conference Version of Tax Cuts and Jobs Act Retains Housing Credit, Housing Bonds, NMTC

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Today the House and Senate GOP leadership filed a conference report on the Tax Cuts and Jobs Act, reconciling the differences between the House-passed and Senate-passed versions of the bill. Both chambers are expected to vote on the bill early next week.

The new version of the Tax Cuts and Jobs Act contains the following provisions that impact affordable housing and community development:

  • Lowers the top corporate tax rate from 35 to 21 percent, effective January 1, 2018.
  • Retains the Low-Income Housing Tax Credit (Housing Credit), with no modifications. The amendment that Sen. Pat Roberts (R-KS) added to the Senate bill was removed in the final bill. This amendment would have replaced the existing Housing Credit general public use requirement exception for artist housing with one for veterans; treated rural areas as difficult development areas for purposes of receiving a basis boost; and reduced the maximum basis boost for all types of boost-eligible developments from 130 to 125 percent.
  • Fully retains private activity bonds (PABs), including multifamily Housing Bonds, which provide critical financing to more than half of all Housing Credit developments and trigger the “4 percent” Housing Credit.
  • Retains the New Markets Tax Credit (NMTC) as currently authorized through 2019.
  • Retains the historic rehabilitation tax credit (HTC), but extends the credit period from one to five years.
  • Creates Qualified Opportunity Zones as proposed under the Investing in Opportunity Act (S. 293), which would incentivize investments in distressed communities through capital gains deferrals. 
  • Creates a base erosion and anti-abuse tax (BEAT), which would affect banks’ ability to use the Housing Credit and other credits to offset certain taxes related to foreign earnings and earnings going to foreign parent companies. The BEAT provision in the Senate-passed version of the bill would have only allowed one credit – the Research and Development Credit – to be taken against the BEAT, but the conference version also exempts the Housing Credit at 80 percent of the value of the credits. The NMTC and HTC are not allowable credits to be taken against the BEAT.

“Enterprise thanks all members of Congress who fought to retain the Low-Income Housing Tax Credit, multifamily Housing Bonds and the New Markets Tax Credit in the Tax Cuts and Jobs Act,” said Enterprise President and CEO Terri Ludwig. “These proven tools are critical to creating and preserving well-designed homes that are affordable for low-income families, seniors, veterans and people with special needs; expanding opportunity; and strengthening communities nationwide.”

Though the Senate version of the Tax Cuts and Jobs Act retained all of these core programs, the House version of the Tax Cuts and Jobs Act would have eliminated Housing Bonds, the NMTC and the HTC, which would have reduced our future supply of affordable housing by over 800,000 homes, and made it much more difficult to revitalize and strengthen communities.