Realtors® win pro-real estate provisions in budget deal
The federal budget deal passed by Congress and now on its way to the President’s desk contains a number of wins for real estate, including a temporary extension of federal flood insurance and extension of several National Association of Realtors®-backed tax provisions.
NAR President Elizabeth Mendenhall issued the following statement:
“The National Association of Realtors® is glad Congress came together to extend funding for the federal government, as well as extend retroactively for 2017 tax relief from debt forgiveness, the deductability of mortgage insurance premiums, and several energy-efficiency related provisions, which provides long-term budget certainty and valuable tax breaks for homeowners. While we avoided another lapse in the National Flood Insurance Program, we now urge Congress to speed passage of legislation to reauthorize and reform the program for a longer term and end the current stopgap approach.”
Here is a rundown of what’s in the budget deal:
Extends the National Flood Insurance Program until March 23, giving lawmakers time to work on a longer term reauthorization and reform legislation. It also adds $27 billion in mitigation and resiliency funds to address issues arising from last year’s hurricanes. And it makes $12 billion available under the Community Development Block Grant (CDBG) program to fund U.S. Army Corp of Engineers flood mitigation projects.
Retroactively Extends for the 2017 tax year:
- Mortgage Debt Forgiveness: Prevents homeowners who were forced to sell their home through a short-sale last year or who faced a foreclosure from being taxed on the “phantom income” they received when a lender cancelled their debt.
- Deduction for Mortgage Insurance Premiums: Allows approximately 4 million homeowners to deduct the mortgage insurance premiums they paid as part of their mortgage. NAR estimates that roughly 2 million homebuyers annually purchase a home that is subject to mortgage insurance. This provision helps make homeownership more affordable for first time and entry-level homeowners.
- Deduction for Energy Efficiency Improvements on Commercial Buildings (179D): Extends the deduction for the cost, up to $1.80 per square foot, of energy-efficient commercial building property. Increasing the energy efficiency of commercial buildings not only helps the environment, it saves building owners and tenants money they can use to grow their businesses and the economy.
Real-estate Related Extenders:
In addition to these three major tax extensions, there are also several more minor extenders that affect real estate, as follows:
- Non-business Energy Property Credit: 10 percent of amounts paid for qualified energy efficiency improvements [e.g., energy-saving roofs, windows, skylights, and doors] and 100 percent of amounts paid for qualified energy property [e.g., high-efficiency water heaters, air conditioning units, and furnaces], with respect to the taxpayer’s principal residence
- Residential Energy Efficiency Property Credit: Extends and phases down the temporary components of the section 25D residential energy property credit for fuel cells, distributed wind property, and geothermal heat pumps
- Credit for energy-efficient new homes: extends the $1,000-$2,000 credit for construction and sale of qualified new energy-efficient homes