NAR: The original proposal included tax changes that would have hurt real estate investors. However, the final signed version leaves the industry largely untouched.
WASHINGTON – President Joe Biden signed the Inflation Reduction Act into law Tuesday – a sweeping climate, healthcare and tax bill. While initial proposals included real estate tax increases that concerned investors, the final signed version spares the industry from the worst ones.
The $784 billion legislation allows Medicare to negotiate prescription drug prices, invests billions of dollars into clean energy and imposes a 15% minimum tax on corporations with more than $1 billion of earnings. A portion of the revenue raised also will go toward deficit reduction.
But the law excludes an array of tax measures on real estate investment proposed last year.
“When discussions began on the original Build Back Better plan, there were nearly a dozen tax changes that could have decimated our efforts to increase the supply of affordable housing,” says Shannon McGahn, the National Association of Realtors®’ (NAR) chief advocacy officer. “After spending more than a year educating lawmakers on these proposals, a bipartisan consensus emerged that they weren’t a good idea, and none of the harmful tax changes made it into the final bill.”
NAR launched a comprehensive action plan last year to advocate for affordable housing supply. A study commissioned by NAR showed the U.S. needs 5.5 million housing units, and that it could take more than a decade to fill that gap – even with accelerated new construction.
“A supply shortage of this magnitude requires an all-of-the-above response,” says NAR President Leslie Rouda Smith. “We are working toward zoning reform, money for new construction, expanded financing options and tax incentives to spur investment, converting unused commercial spaces to residential and increasing the supply of construction workers. And our efforts are building consensus that decisive action is needed.”
- In March, the White House included a major funding request for affordable housing in its budget proposal.
- In May, thousands of Realtors descended on Washington, D.C., and hand-delivered to Congress a comprehensive list of actions it could take to address the housing shortage.
- Also in May, the Biden administration released a Housing Supply Action Plan.
- In July, the Treasury Department allowed the use of $350 billion in American Rescue Plan funds for developing, repairing and operating affordable housing units.
“We aren’t just working with Congress and the administration,” McGahn says. “We’re also working with industry partners and agencies on a wide array of initiatives to expand homeownership – such as the Black Homeownership Collaborative’s 3-by-30 plan to add 3 million net new Black homeowners by 2030.”
Source: National Association of Realtors® (NAR)
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