New Version of Tax Cuts and Jobs Act Retains Housing Credit, Housing Bonds

Friday the House and Senate GOP leadership filed a conference report on the Tax Cuts and Jobs Act, reconciling the differences between the House-passed and Senate-passed versions of the bill. Both chambers are expected to vote on the bill early this week.

The new version of the Tax Cuts and Jobs Act would:

  • Retain the Low-Income Housing Tax Credit (Housing Credit), with no modifications. The amendment that Sen. Pat Roberts (R-KS) added to the Senate bill was removed from the final bill. This amendment would have replaced the existing Housing Credit general public use requirement exception for artist housing with one for veterans; made properties in rural areas eligible to receive a basis boost; and reduced the maximum basis boost for all types of boost-eligible developments from 130 to 125 percent.
  • Fully retain private activity bonds (PABs), including multifamily Housing Bonds, which provide critical financing to more than half of all Housing Credit developments and trigger the “4 percent” Housing Credit. The bill made no modifications to PABs that would have undercut Housing Bonds.
  • Lower the top corporate tax rate from 35 to 21 percent, effective January 1, 2018.
  • Create a base erosion and anti-abuse tax (BEAT), which would affect investors’ ability to use the Housing Credit and other credits to offset certain taxes related to foreign earnings and earnings going to foreign parent companies. However, the conference report mitigates the impact of the BEAT on the Housing Credit by exempting 80 percent of the value of the Housing Credit from the BEAT.

Thanks to all members who successfully mobilized to urge Congress to reject the House proposal that would have eliminated all PABs, including multifamily Housing Bonds. This provision would have decimated affordable housing production by essentially eliminating the “4 percent” Housing Credit and causing us to lose out on building or preserving more than 800,000 affordable homes over the next decade. The fact that the Tax Cuts and Jobs Act retains both the Housing Credit and Housing Bonds is a testament to the success and critical nature of these programs, as well as our continued advocacy.

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