As always, the end of the year brings intense legislative activity in Washington. Recent actions affecting housing include the following:
House Tax Extender Package
The House passed the Tax Increase Prevention Act of 2014 on December 3, which will extend – to the end of 2014 only – a number of expired tax relief provisions, including the 9% housing tax credit. If passed, which is likely, this will apply to tax credit allocations made prior to January 1, 2015, so LIHTC projects that were marginal if the applicable credit percentage was less than 9% may become more feasible. The bill also extends the military housing allowance exclusion for certain areas of the country. Clearly, this is a stopgap measure; what is needed is action in 2015 that will make these provisions permanent.
National Housing Trust Fund to be Funded
On December 11, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to begin funding the National Housing Trust Fund (NHTF) and Capital Magnet Fund. The NHTF was established in 2008 and was to be funded by profits from the two noted agencies. However, the payments were suspended when the housing crisis hit. Now that funding can move forward, another boost to affordable rental housing is available – possibly totaling $2 billion annually.
Congressman Camp Introduces Formal Tax Reform Legislation
On December 11, House Ways & Means Committee Chairman Dave Camp officially introduced H.R.1, the Tax Reform Act of 2014. The official bill has no modifications from the draft legislation introduced by Congressman Camp in February of this year. The legislation includes the Low-Income Housing Tax Credit, but not the New Market Tax Credit, historic tax credit or renewable energy tax credits. The Act will now begin the arduous process of working its way through the legislative system, including negotiations with the Senate and White House, meaning that while tax reform is on the horizon, it is still a long way off.