Summary List Placement
Before he was president-elect, Joe Biden had a long list of proposals with the potential to transform the real-estate industry. His $640 billion, 10-year housing initiative was poised to affect everyone from those seeking affordable housing to real-estate investors.
After the November election, Republicans seemed poised to retain a majority in the senate, acting as a block on some or all of Biden’s housing plans.
“Biden’s housing plan is likely just a wish list unless the Democrats can wrangle control of the senate,” Forbes Advisor reporter Natalie Campisi wrote in November. But after early January, the Democrats have got that control, sweeping both of the open senate seats in the special election in Georgia.
Democrats have at least two years to take advantage of their majority, as 34 senate seats will be up for grabs in 2022.
Here’s a rundown of some of the Biden housing initiatives that now have a clearer path to passage.
Creating more affordable housing
To combat the affordable housing crisis in the US, Joe Biden wants to create a $100 billion Affordable Housing Fund — $65 billion of which would be pooled toward building and rehabilitating affordable housing in places where there are shortages.
A Biden administration would provide tax incentives for the construction of more affordable housing in communities that need it most, including the expansion of the Low-Income Housing Tax Credit (LIHTC), a tax provision designed to incentivize the construction or rehabilitation of affordable housing for low-income tenants.
Since the 1980s, the LIHTC has created nearly 3 million affordable-housing units thanks to a $10 billion investment, according to a report from the Urban Institute and the US Treasury. Pending congressional approval, Biden’s plan intends to significantly increase the number of new or renovated affordable-housing units eligible for the tax credit.
But those 3 million units have barely made a dent in the affordable housing crisis currently crippling our country. The National Low Income Housing Coalition estimates that no US state has adequate affordable housing, with the nationwide shortage coming to 7 million units.
This ambitious plan to tackle the shortage was previously seen as difficult to move past a Republican-controlled Senate. That’s now changed.
Repealing breaks for investors
During the campaign, many Republicans criticized Biden’s plans to raise income taxes on individuals making over $400,000 a year. That is among Biden’s bolder tax proposals that now have a greater likelihood of passing a Democrat-controlled senate.
For real-estate investors, one of Biden’s most pressing tax threats was the proposed repeal of existing breaks including the 1031 exchange.
Also called the 1031 transfer, the exchange is a provision that gives property owners and investors the ability to defer capital-gains taxes at the sale of an investment or business-use property, provided a “like-kind asset” is purchased with its profits.
The strategy is a favorite for investors looking to swap assets, or for any investors interested in avoiding a capital-gains tax of up to 20%, depending on your …read more
Source:: Business Insider