Tax Increase Prevention Act Approved

Last week the House approved H.R.  5771, the Tax Increase Prevention Act which will extend numerous tax bills that expired during 2014.  The renewal now extends the deadlines to 12/31/14, retroactive to January 1, 2014.  Many of these extensions affect the housing industry.

Dollar signHere is a list of the bills that affect the housing industry:

  • Section 45L Tax Credit for Energy Efficient New Homes.  This credit provides Builders a $2,000 tax credit for exceeding energy standards by 50% (based on the 2006 International Energy Conservation Code and supplements.  This bill is expected to save home builders $267 million in taxes for 2014.

  • Fixed Credit Rate for 9% Low Income Housing Tax Credit projects. The bill will renew the 9% fixed rate, but only for 2014 allocations.

  • Section 25C Tax Credit for Qualified Energy Efficiency Improvements. This credit could be worth up to $500 ($500 lifetime cap with lower caps for certain products like windows) for consumers to install qualified energy-efficient upgrades. Section 25C is expected to save home owners who remodel $832 million in taxes for 2014 improvements.

  • Section 163 Deduction for Private Mortgage Insurance. This credit allows taxpayers (subject to an income cap) to deduct premiums paid for private mortgage insurance. The deduction for PMI is expected to save home owners $919 million for tax year 2014.

  • Short-sale mortgage debt forgiveness. This provision would extend through 2014 the exclusion from gross income of a discharge of qualified principal residence indebtedness due to a short sale.

  • Bonus Depreciation. This credit extends the 50% bonus depreciation, allowing an additional first-year deduction of 50 percent of the cost of equipment.
  • Section 179D Energy-Efficient Commercial Buildings Deduction. This credit provides a deduction (up to $1.80 per square foot) for commercial buildings, which includes multifamily buildings built under the commercial code, that exceed specific energy-efficiency minimums.
  • Section 179 Expensing. This credit increases the maximum expensing amount to $500,000 for qualified property on up to $2 million in property placed in service 2010-2013.

Some good news for new and retrofitted houses as well as homeowners saddled with PMI insurance. Now we wait on the Senate to pass the H.R. 5771 by the end of this year’s sessions.

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