A shut-down has been averted, and there’s good news for real estate in the budget agreement, which President Trump signed this morning. The government had temporarily closed after Congress failed to pass a government funding bill before midnight Thursday, but an agreement was reached Friday morning. The two-year, $400 billion spending deal came as a result of a bipartisan group of lawmakers supporting the agreement. Congress now has until March 23 to write the legislation to accompany the spending deal that will fund the government for the rest of the fiscal year.
The National Association of REALTORS® fought and achieved a number of wins for real estate, including a temporary extension of federal flood insurance and extension of NAR-backed tax provisions. Here are the details:
- The National Flood Insurance Program has been extended until March 23, giving lawmakers time to work out an extension that could last until September 30. The deal also adds $27 billion in mitigation and resiliency funds to address issues arising from last year’s hurricanes, and it makes $12 billion available under the Community Development Block Grant program to fund U.S. Army Corp of Engineers flood mitigation projects.
Extension of tax provisions
The deal retroactively extends these provisions for the 2017 tax year:
- A mortgage debt forgiveness extension prevents underwater homeowners who’ve had mortgage debt forgiven by lenders in a modification or foreclosure from taking a tax hit on the help they’ve received.
- Deduction for mortgage insurance premiums.
- Deduction for energy efficiency improvements on commercial buildings.
In addition to these three major tax extensions, there are also several others that have an impact on the real estate industry:
- The nonbusiness energy property credit applies to 10 percent of the amount paid for qualified energy efficiency improvements such as energy-saving roofs, windows, skylights, and doors, and 100 percent of that paid for qualified energy products, such as high-efficiency water heaters, air conditioning units, and furnaces.
- The residential energy efficiency property credit extends and phases down the temporary components of residential energy property credit for fuel cells, distributed wind property, and geothermal heat pumps
- The tax credit for energy-efficient new homes offers a $1,000-$2,000 credit for construction and sale of qualified new energy-efficient homes.
None of these tax provisions were extended beyond 2017.