Biden Budget Proposal Calls for Harmful Multifamily Tax Pay-Fors Special from the National Apartment Association
P
resident Biden’s Fiscal Year 2023 budget proposal includes several provisions key to the rental housing industry. On March 29, President Biden released his Fiscal Year 2023 budget proposal, which includes . This year’s proposal includes several provisions key to the apartment industry—including a 19% HUD budget increase and provisions that would once again target ordinary income tax rates, capital gains tax rates, the taxation of unrealized capital gains at death, like-kind exchanges and carried interest.
to develop and manage real estate, an enterprise that often includes significant risk. The proposal is largely viewed as a messaging document that is intended to layout the Administration’s agenda for the year ahead—whether or not included provisions are eventually enacted remains to be seen. However, NAA and NMHC remain highly engaged to deter policymakers from implementing policies that threaten the stability of our industry and hinder much-needed development.
What This Proposal Means for the Industry
The HUD budget includes $35 billion for the Housing Supply Fund to provide affordable housing grants to state housing finance agencies.
NAA and NMHC appreciate the Administration’s focus on additional HUD funding that would support shared housing affordability goals. However,we remain concerned about the harmful impacts of the proposed tax provisions. Congress rightly did not enact these tax proposals last year when they were considered as part of the infrastructure package, and doing so now would only reduce funds available
28
Apartment News
Housing Supply Fund
Housing Choice Vouchers Biden is calling for $32.1 billion in additional voucher funding to provide support to 200,000 additional households in need.
Marginal Income Tax Rates
www.aaoc.com
The budget would increase the top May 2022
statutory marginal income tax rate to 39.6% from 37% effective for taxable years beginning after December 31, 2022. Absent legislation, today’s 37% rate reverts to 39.6% beginning in 2026 under current law. Capital Gains Tax Rates and Taxation of Unrealized Gains at Death The budget proposes to tax capital gains at ordinary income tax rates for taxpayers earning over $1 million. This would mean that today’s 20% top statutory rate would rise to 39.6% for impacted taxpayers not including the application of the 3.8% net investment income tax. In addition, the proposal would impose a tax on unrealized capital gains at death. Taxpayers would be allowed to exclude $5 million in assets ($10 million per couple) in addition to $250,000 (single taxpayers) / $500,000 (married taxpayers) of the value of a principal residence. A 15-year fixed payment plan would be available with respect to assets other than liquid assets and taxation of Tax Pay-Fors — continued on page 30
