Late last night the Senate passed the bill formerly known as “The Tax Cuts and Jobs Act” on a party-line vote. The slightly modified tax bill, now renamed “To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” goes back to the House for another vote today and should be signed by the President this afternoon.
The NC Housing Coalition is grateful to North Carolina’s Congressional delegation for working to avoid the most devastating cuts to affordable housing that were in the House tax bill. However, the final version will still see a drop in affordable housing production nationwide at a time when North Carolina needs more, not less. The Coalition also remains concerned about what the deficit increase as a result of this bill will mean for future spending cuts to crucial affordable housing programs.
The final version of the bill:
- Preserves the Low Income Housing Tax Credit, but reforms passed in the Senate version were taken out of the final tax bill;
- Preserves private activity bonds with no modifications that would impact housing production;
- Preserves the New Markets Tax Credit;
- Retains the Historic Tax Credit at 20%, but taken over five years and subject to transition rules. Legislation would repeal 10 percent non-historic rehabilitation tax credit for pre-1936 properties, subject to transition rules;
- Modifies the Mortgage Interest Deduction by lowering the eligible mortgage from $1 million to $750,000 for newly purchased homes;
- Lowers the top corporate tax rate from 35% to 21%, effective January 1, 2018; and
- Creates a Base Erosion and Anti-Abuse Tax (BEAT), which would affect investors using the Housing Credit to offset foreign earnings. The conference report mitigates the impact of the BEAT by exempting 80% of the Housing Credit.
Thank you to each of you who reached out to your elected officials to educate them on the impact of these tax changes to affordable housing. Your work made an incredible impact on the final version of the tax bill. Stay tuned as we continue to analyze the impact of this bill on affordable housing production an how this will impact our policy priorities going into North Carolina’s short legislative session next year.