APARTMENT ADVOCATE
NATIONAL APARTMENT ASSOCIATION
Let the Federal Budget Games Begin
N
ow that President Obama has sent his
record-breaking $4 trillion FY 2016
budget request to Congress, department heads from across the federal
government are heading to Capitol Hill to negotiate and justify their budgets with Senate and
House lawmakers. That includes HUD Secretary
Julián Castro and his senior team, who will be
tasked with presenting numerous notable provisions in his department’s budget.
HUD BUDGET BREAKDOWN
The President’s proposed budget includes more
than $49 billion for HUD, which is about $4
billion more than what Congress approved for FY
2015.
Specifically, the funding level for the Tenant
Based Rental Assistance in the proposal is $21.12
billion, which represents a 9 percent increase over
last year’s appropriated amount. Project Based
Rental Assistance was also increased by $1.03
billion over last year’s amount to $10.76 billion.
In addition, the Rental Assistance Demonstration
received $50 million for the conversion of public
housing units in high cost areas as part of the
Administration’s preservation strategy for affordable housing.
Programmatic changes in the proposed HUD
budget include new flexibilities for Public Housing Authorities and property owners to recertify
the incomes of families on fixed incomes every
three years, similar to a bill currently sponsored
by Congressman Ed Perlmutter (D-Colo.) and
Steve Stivers (R-Ohio). Changes were also included to address the timely release of Fair Market Rents.
TAXES
On the tax side, the Administration seeks to
increase the maximum tax rate on capital gains
and dividends from 20 percent to 24.2 percent,
taking the maximum tax rate on such income to
28 percent when the 3.8 percent tax on net investment income is included.
The proposal also would, subject to a $100,000
exclusion, tax property that is transferred to a
decedent as a capital gain. Current law resets the
value of an asset for tax purposes at its fair market
value at the time of transfer, which shields those
inheriting property from capital gains taxes.
The Administration’s budget again makes
several proposals designed to benefit the multifamily industry. They would:
• Modify and extend the tax deduction for
energy-efficient commercial buildings
and the tax credit for the construction of
energy-efficient new homes;
• Expand and make targeted improvements
to the Low-Income Housing Tax Credit;
• Exempt foreign pension funds from the
application of the Foreign Investment in
Real Property Tax Act, or FIRPTA;
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