The House and Senate voted this week to approve a year end “tax extenders” bill, with Realtor® priorities strongly represented in the final language.
The legislation addresses over $600 billion in tax breaks for both individuals and businesses, including the extension of many already-expired tax provisions.
Among the most important to Realtors® is a two year extension of tax relief for mortgage debt forgiveness. This tax relief has been in place since 2007 and ensures that underwater homeowners who are going through a workout or a short sale on their home aren’t hit with a major tax bill in connection with the forgiveness of their mortgage debt.
The tax package extends this provision for another two years, covering tax years 2015 and 2016.
National Association of Realtors® President Tom Salomone called the tax extenders bill “critical,” highlighting its importance to the real estate industry as well as the broader economy.
“These tax extenders offer critical support for consumers, homeowners, commercial property investors and small businesses alike,” said Salomone. “A strong economy requires certainty, and this proposal gives a healthy dose of it to millions of American taxpayers.”
In addition to mortgage debt forgiveness, NAR highlighted the permanent extension of a 15-year cost recovery period for the depreciation of qualified leasehold improvements, which is important for improvements made to nonresidential commercial properties. Also significant is the extension of certain incentives for energy efficient homes and properties as well as the immediate expensing of business equipment.
The expensing provision is particularly important to small businesses owners – including many Realtor® members – who make equipment purchases like computers, cameras, and even vehicles to support their business.
“We’re grateful for the leadership shown on this important piece of legislation,” said Salomone. “It’s our hope that these extenders move quickly to the President’s desk so we can continue our work in support of homeownership.”