Senate Tax Extender Plan Likely to Omit “Carried Interest” Proposal
This week, NAHB sent a letter to Senate leaders urging the Senate to include an extension of the Low Income Housing Tax Credit (LIHTC) exchange program and the New Energy Efficient Homes Credit (45L credit) in pending legislation that would extend popular tax breaks that are due to expire at year-end. The letter also voiced strong opposition to a change in the taxation of “carried interest” as a revenue offset to pay for the expiring tax breaks.
This change would significantly impact both existing and future commercial and multifamily real estate properties and is opposed by NAHB as well as a broad coalition of commercial real estate organizations. The House last week passed H.R. 4213, legislation that contains an extension of the LIHTC exchange program. However, the House bill would also allow the 45L tax credit to expire and would increase the tax on capital gain income generated by a carried interest in a partnership from the current rate of 15% to as high as 35%.
The Senate has rejected the carried interest proposal in the past and the chamber has proposed using a different revenue offset to pay for its tax extenders legislation, putting it at odds with the House on how to proceed.
With the Senate still mired in the health care debate and the House having left for the year, it appears that extenders will have to be passed retroactively sometime in 2010, which is not unprecedented.
The Senate has not made its tax extenders bill public yet, so NAHB will continue to press for inclusion of our LIHTC proposals and the 45L credit in the package while reiterating our strong opposition to using a change in the taxation of carried interest as the revenue offset.
For more information, e-mail Greg Brown or cal him 800-368-5242 x8421.
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