Housing industry sees promise in latest congressional tax proposal
The Mortgage Bankers Association (MBA) expressed support for a new tax reform proposal under consideration by the House Committee on Ways and Means, calling the legislation “an important and necessary step” toward promoting job growth, investment, and housing affordability.
In a letter dated May 13, addressed to chairman Jason Smith (R-MO) and ranking member Richard Neal (D-MA), the MBA endorsed Smith’s Amendment in the Nature of a Substitute (ANS), which is scheduled for markup as part of the budget reconciliation process.
The trade group, representing more than 2,000 real estate finance companies, praised provisions in the bill that would extend key components of the 2017 Tax Cuts and Jobs Act (TCJA). Specifically, the MBA noted approval of the preservation of the mortgage interest deduction on the first $750,000 of home acquisition debt, as well as the exclusion of up to $500,000 in gains from the sale of a principal residence.
“The bill will help both homeowners and renters alike,” wrote Bill Killmer, the MBA’s senior vice president for legislative and political affairs. He also noted that MBA is “pleased” that the ANS retains the provision allowing a deduction for qualified residence interest.
Association backs provisions
The MBA highlighted several real estate investment incentives retained or expanded in the ANS, including the continued use of Section 1031 like-kind exchanges, preservation of business interest deductibility for real estate using EBITDA, and the expansion of the Low-Income Housing Tax Credit (LIHTC).
The bill also proposes extending the availability of tax-exempt private activity bonds (PABs) and introducing a new round of Opportunity Zones through 2033, with added transparency measures.
The letter also commended a proposed increase in the Qualified Business Income deduction from 20% to 23% under a permanent Section 199A, a change the MBA said would benefit the many small businesses and pass-through entities in real estate finance.
While broadly supportive, the MBA noted concerns with certain aspects of the bill. These include a proposed 35% cap on total itemized deductions for top-bracket taxpayers and what the association described as an overly complex limitation on state and local deductions for some pass-through entities.
The MBA also backed the bill’s provision to raise the federal debt ceiling, calling it “responsible” and essential for market stability.
“As the bill progresses through the House and Senate, the MBA believes that certain provisions can be improved,” the letter concluded. “We stand ready to work with you… to ensure that Americans, whether they rent or own, continue to have access to affordable and sustainable housing.”
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