NAR Commercial Issues Brief April 2014

NAR Commercial Issues and Actions April 2014
Issue: Alternative Minimum Tax (AMT): On January 2, 2013, President Obama signed into law the American alternative minimum tax (AMT) starting wit hthe 2012 tax year. Specifially, the measure sets the exemption amounts (i.e., the income not subject to taxes under the AMT) at $50,600 for individuals and $78,750 for couples filing jointly, then adjusts these amounts yearly for inflation. It also allows various non-refundable personal credits to be claimed against 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 Congress to ensure a permeant patch to the AMT.
Issue: Basel III: The Federal Reserve, Federal Deposti Insurance Corporation (FDIC), and 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 seveal letters to bank regulators and lawmakers, 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.
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(NAR Issue Brief)