There Is a Chance That Congress Could Address CRE Tax Issues at the Last Minute
There’s about to be a lame duck session of Congress. No one knows who will be in charge next. But that means some officials might try to push through some important measures.
As midterm elections approach, there can be a sense that Congress is almost certainly in a lame-duck frame of mine. Re-elections and having political control are the major issues, so what chance is there to get anything done?
As the Real Estate Roundtable pointed out, there are some big “musts” left for Congress.
Politico notes two major needs: an omnibus spending package by December 16 and the National Defense Authorization Act.
The omnibus spending bill is the enormous one that funds the government. Without it, parts of the government will run out of permission to spend any money, which turns into a partial (in this case) shutdown. The NDAA is critical because that’s what keeps the lights turned on in the Pentagon and all those many military bases and defense contractors’ offices.
Among the list of items that Politico calls “probable (but no promises)” are several tax provisions. “Democrats want to revive the Child Tax Credit [CTC] enhancement. Republicans want to revive a tax benefit for businesses that allowed them to immediately write off their research expenses. Those are just two items on a larger slate of tax breaks that could be in play in the lame duck, plus further incentives for retirement savings.”
Then there are a number of leftovers from the 2017 Tax Cuts and Jobs Act, the Tax Policy Center says, like some business tax breaks, including bonus depreciation and limitations on deducting interest expenses that started to become stricter this year.
One other tax aspect is also on the blocks, according to the Real Estate Roundtable. “Other expired tax provisions include a temporary increase in allocations of low-income housing tax credits (LIHTCs) to states.” That’s important for the multifamily industry.
“Tax extenders usually move without much controversy because lawmakers don’t bother to pay for them,” TPC wrote. “But a grand bargain with the CTC and TCJA-related business tax changes won’t be cheap. Congressional scorekeepers estimate the 2021 version of the CTC would cost about $1.6 trillion over a decade, while the business investment tax breaks would reduce federal revenues by another $400 billion (there currently isn’t an official estimate for making the net interest deduction cap less restrictive).”
But where does the money come to pay for the extended tax breaks? A good and probably sticky question.