Commercial Issues and Actions: August 2014

NAR Issue Brief: Commercial Issues and Actions: August 2014
Issue: Alternative Minimum Tax (AMT): On January 2, 2013, President Obama signed into law, the American Taxpayer Relief Act, providing a permanent “patch” that prevents tens of millions of taxpayers from being subject to the alternative minimum tax (AMT), starting with the 2012 tax year. Specifically, the measure sets the exemption amounts (i.e., the amounts yearly for inflation. It also allows various non-refundable personal credits to be claimed agains the AMT. The AMT was created by the Tax Reform Act of 1986 to prevent higher-income taxpayers from using credits and deductions to completely offset their federal income tax liability.
NAR Action: NAR successfully worked with Confress to ensure a permanent patch to the AMT.
Issue: Basel III: The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of Currency (OCC) have finalized a new risk-based capital category – High Volatility Commercial Real Estate Exposures (HVCRE) for commercial acquisition, development, and construction (ADC) loans. Specifically, the new changes raise the risk-weight for an ADC loan from 100% to 150%. In response to the final changes, it is highly likely that banks would substantially change their current lending practices and reduce the amount of available credit in order to avoid the higher capital charges associated with ADC loans.
NAR Action: After several letters to bank regulators and lawmaker, including comments sent to the Federal Reserve, FDIC, and OCC, NAR continues to meet with Congress and the Administration to modify the final rule in order to prevent a reduction in commercial real estate lending as well as an increase in borrowing costs.
Issue: Bonus Depreciation: In 2013, President Obama signed into law the American Taxpayer Relief Act, which extended the 50% bonus depreciation rule for qualifying property purchased and placed in service before January 1, 2014 (before January 1, 2015 for certain longer-lived and transportation assets). This provision allows businesses to take a deduction of 50% of the value of that property in addition to amounts of that they can otherwise claim under the depreciation rules. Bonus depreciation is allowed against both the regular tax system and the AMT. In addition, businesses could elect to accelerate some AMT credits in lieu of bonus depreciation.
NAR Action: Bonus depreciation rules have once again expired (although they are still in effect through 2014 for certain transportation property, as well as certain longer-lived items). NAR is urging Members of Congress to extend this provision as it considers the extension of other important tax provisions that also expired at the end of 2013.
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By: NAR Issue Brief (REALTOR.org)
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