Sign Up For Novogradac Industry Alert Emails

Sen. Baucus Proposes Changes to Cost Recovery, Accounting Rules

Thursday, November 21, 2013 - 8:00AM

Senate Finance Committee Chairman Max Baucus, D-Mont., today released the third in a series of tax reform proposals. The staff discussion draft released today focuses on reforms to cost recovery and tax accounting rules. Among other things, Sen. Baucus proposes extending the depreciation period for residential rental property from 27.5 years to 43 years. Novogradac and Company is reviewing the effect of Sen. Baucus’ pooling approach and overall pool depreciation percentages.

These proposed changes are similar to those considered in Novogradac & Company’s report, “Affordable Rental Housing After Tax Reform: Calculating Corporate Tax Reform's Possible Effects on Equity Raised from Low-Income Housing Tax Credits.” That report found that extended depreciation, when combined with lower top corporate tax rates, would lower LIHTC yields and create downward pressure on LIHTC investor equity pricing, which could result in an annual loss of as much as $1 billion or more in LIHTC equity.

Learn more about Novogradac's expertise and many services