Proposed legislation from Senate Majority Leader Chuck Schumer and Sen. Joe Manchin to address health care and climate, raise taxes on high earned and large corporations, and reduce federal debt includes a number of provisions that could affect the residential construction industry, according to the NAHB. The bill provides $837 million to U.S. Department of Housing and Urban Development for loans and direct grants to improve energy efficiency, water efficiency, and climate resilience for affordable housing and funding for forestry measures, including fuels reduction and vegetation management. In a post on NAHB Now, the NAHB outlines other elements included in the legislation that could impact the residential construction industry. The Senate could vote on the legislation as early as this week.
$1 Billion In Grants for Advancing Energy Codes
While NAHB supports the adoption of cost-effective, modern energy codes, we oppose these grant programs as they lack flexibility and consideration of overall performance to account for local conditions when adopting the 2021 edition of the International Energy Conservation Code (IECC). $1 billion will be made available to state and local governments to adopt advanced energy codes.
NAHB is concerned regarding the grant programs that promote the adoption of several provisions in the 2021 IECC that do not meet cost-effectiveness criteria for the consumer and provisions for zero energy buildings, as included in the appendix to the 2021 IECC.
Tax Provisions
Carried interest. For taxpayers earning more than $400k, the holding period increases from three to five years. However, income that is attributable to a real property trade or business retains a three-year holding period. The bill also makes other changes to this section of the tax code which might affect certain partnerships, including real estate.
15% corporate minimum tax. This applies to companies with an average adjusted financial statement income over $1 billion that don’t currently pay a 15% rate.Includes protections to preserve the value of tax credits like LIHTC.
Section 45L New Energy Efficient Home Credit. The bill would extend the 45L credit until Dec. 31, 2032. This credit expired at the end of 2021. The bill would first extend the credit for one year — until De. 31, 2022 — as a $2,000 credit with the same qualification requirements as existed in 2021. After Dec. 31, 2022, the pathway to qualify for the credit would be completely revised. NAHB opposes these changes.
