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Tax Law Roundup current law developments in U.S. taxation

House Passes Massive Extenders Package – Moves to Senate

Posted in General, Legislative, Real Estate

IMG_3999Today the House passed the much talked about “Extenders” legislation and it now moves to the Senate with momentum.  The bill makes many of the annual extenders permanent (or for a period of multiple years) and covers a wide range of topics.  Below is a list of some of the provisions affecting the real estate industry, with more detail on these and other provisions found in the full text, in the section-by-section summary, and in the JCT summary.  The legislation is roughly estimated to cost $622 billion over a 10-year period after revenue offsets.  For the current status of the Extenders legislation (called the “Protecting Americans from Tax Hikes Act of 2015” or “PATH”), see H.R. 2029, Amendment 2.

Real Estate Related Provisions (non-REIT)

  • Special rule for qualified conservation contributions made permanent
  • Extension of 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements
  • Extension and modification of increased expensing limitations and treatment of certain real property as section 179 property
  • Extension of reduction in S corporation recognition period for built-in gains tax
  • Extension of RIC qualified investment entity treatment under FIRPTA
  • Extension of new markets tax credit
  • Extension and modification of bonus depreciation

 

 

REIT Related Provisions

 

  • Restriction on tax-free spinoffs involving REITs
  • Reduction in percentage limitation on assets of REIT which may be taxable REIT subsidiaries
  • Prohibited transaction safe harbors
  • Repeal of preferential dividend rule for publicly offered REITS; authority for alternative remedies to address certain REIT distribution failures
  • Limitations on designation of dividends by REITs
  • Debt instruments of publicly offered REITs and mortgages treated as real estate assets
  • Asset and income test clarification regarding ancillary personal property
  • Hedging provisions
  • Modification of REIT earnings and profits calculation to avoid duplicate taxation
  • Treatment of certain services provided by taxable REIT subsidiaries
  • Exception from FIRPTA for certain stock of REITs; exception for interests held by foreign retirement and pension funds
  • Increase in rate of withholding of tax on dispositions of United States real property interests
  • Interests in RICs and REITs not excluded from definition of United States real property interests
  • Dividends derived from RICs and REITs ineligible for deduction for United States source portion of dividends from certain foreign corporations

 

 

Alternative Energy Related Provisions

 

  • Extension and modification of credit for nonbusiness energy property
  • Extension of credit for alternative fuel vehicle refueling property
  • Extension of Credit for Electric Motorcycles
  • Extension of second generation biofuel producer credit
  • Extension of biodiesel and renewable diesel incentives
  • Extension of credit for the production of Indian coal facilities
  • Extension of credits with respect to facilities producing energy from certain renewable resources
  • Extension of credit for energy-efficient new homes
  • Extension of special allowance for second generation biofuel plant property
  • Extension of energy efficient commercial buildings deduction
  • Extension of special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities
  • Extension of excise tax credits and payment provisions relating to alternative fuel
  • Extension of credit for fuel cell vehicles