The bill, which passed by a vote of 241 to 181, would be paid for by cracking down on international tax evasion and taxing “carried interest,” which would impose a multi-billion-dollar tax increase on real estate at a time when the industry is struggling to emerge from its worst downturn in decades. Under present law, capital gains income generated by carried interest in a partnership is subject to a tax rate of 15%. Under the House bill, the carried interest would be characterized as ordinary income subject to tax rates up to 35%.

Prior to the vote on the bill, NAHB sent a letter to House members in support of the LIHTC measure but strongly opposing the use of carried interest as its central revenue offset, pointing out that this would result in higher prices for multifamily housing, slower job creation and less community development, especially in underserved areas. The letter also expressed deep concerns that the legislation would allow the New Energy Efficient Homes Tax Credit (45L credit) to expire, noting that this is “the only incentive in the tax code for increasing energy efficiency in newly constructed homes.”

The bill now goes to the Senate, which has rejected the carried interest proposal in the past.

NAHB will continue to work with leaders in both chambers to ensure that any final bill omits the use of carried interest as a revenue offset to pay for the expiring tax breaks and also urge lawmakers to add the 45L tax credit to the extender package. To view the legislation, click here and type H.R. 4213 in the box at the center of the page. For more information, contact Greg Brown at 1-800-368-5242, ext. 8421.

Earlier in the week, NAHB sent a letter to House members to express the association’s views on this legislation that would overhaul the financial regulatory system. NAHB urged Congress to ensure that any changes to the housing finance system do not raise the cost and restrict the availability of mortgage credit for qualified borrowers. The Senate Banking Committee is considering its own proposals to address risks to the stability of the U.S. financial system. Senate action is not expected until next year, and it is possible that the legislation could be combined with some type of regulatory reform for Fannie Mae and Freddie Mac. NAHB will continue to monitor developments closely.

To view the legislation, click here and  type H.R. 4173 in the box in the center screen. For more information, contact Scott Meyer at ext. 8144. [return to top]

Lawmakers indicated that they are continuing to look at ways to address the cost issues associated with drywall remediation but that they have been hindered by the fact that no one has yet been able to determine the entire scope of the problem and how many homes are impacted.  The congressional caucus and NAHB agreed to keep working together to address the issue and get relief to the home owners who have been impacted by this product. For more information, contact Jenna Hamilton at x8407. [return to top]