This article came from the National Apartment Institute and the Apartment Industry Mobilization Service.For more industry news and more details, click the link or read below:
This is important information for property & investment owners. Both the Senate and the House are set to vote on proposals to extend the 2001 and 2003 Bush tax cuts, which expire at the end of the year, before members return to their districts for the August recess. Given the economy’s uneven recovery, most legislative stakeholders agree that there needs to be some kind of short-term extension of the tax cuts to help prevent the economy from backsliding. However, disagreement over whether the tax cuts should be renewed for all taxpayers or only for those earning under certain income thresholds is likely to prevent any near-term resolution.
This week, the Senate will vote on both a Democratic proposal that would extend the tax cuts for individuals/couples earning less than $200,000/$250,000 and a competing Republican proposal that would extend the tax cuts for all taxpayers regardless of income. Neither measure is likely to secure the 60 votes necessary for passage.
The House is scheduled to vote the week of July 30 on legislation to extend the tax cuts for all taxpayers. This measure is likely to pass, but no final congressional action is forecast to take place until after the November election. Allowing the tax cuts to expire would hurt the multifamily industry because many real estate firms are structured as so-called flow-through entities (e.g., partnerships, LLCs and S Corporations), meaning owners assume tax liability for their share of income received on their individual tax forms. Therefore, raising taxes on individual taxpayers could have significant business implications on the industry’s ability to effectively construct, rehabilitate and manage apartment properties.