January 15, 2016 11:03 am
One of the extenders concerns tax relief for mortgage debt forgiveness, protecting underwater homeowners from incurring a large tax bill on phantom income in connection with a workout or short sale.
Tom Salomone, president of the National Association of REALTORS®, notes that since 2007, this specific tax relief has strengthened individual communities and the broader economy as more distressed homeowners were offered the flexibility to responsibly address an underwater mortgage.
“These tax extenders offer critical support for consumers, homeowners, commercial property investors and small businesses alike,” Salomone says. “A strong economy requires certainty, and this proposal gives a healthy dose of it to millions of American taxpayers.”
The tax extenders deal offers an additional two years of protection covering tax years 2015 and 2016.
Also included in the bill is the permanent extension of a 15-year cost recovery period for the depreciation of qualified leasehold improvements. This is important as it ensures that a commonsense cost-recovery period remains in place permanently for improvements made to nonresidential commercial property.
Another real estate-related provision is the renewal of certain incentives to promote energy efficient commercial and multifamily buildings, including the extension of an expired tax credit that ranges between $1,000 - $2,000 for energy-efficient new homes for an additional two years.
The bill also includes changes to the Foreign Investment in Real Property Tax Act, which is expected to ease restrictions on investment in commercial real estate.
One part of the bill that might not seem as though it’s aimed at those in the real estate industry, but will have a positive effect on the industry at large, is legislation that permanently extends rules allowing small- and mid-sized businesses to expense business equipment, rather than depreciate the equipment over several years. Salomone says this is important to REALTORS® who purchase new computers, copiers, cameras and even vehicles in the course of doing business.
“We’re grateful for the leadership shown on this important piece of legislation and look forward to continuing our work in support of homeownership,” Salomone says.
To learn more about the recently passed tax extenders, contact our office today.
Published with permission from RISMedia.