The document discusses the timing and priorities for tax reform. It notes that passing a bill by the end of 2017 would be aggressive and Secretary Mnuchin sees August as not realistic. Key multifamily tax priorities include protecting flow-through entities and preserving deductions. Proposals from Republicans and Trump would lower rates but impact affordable housing without changes to protect programs like LIHTC. The outcomes of tax reform are unclear and will depend on issues of revenue neutrality, sunset provisions, and business provisions.

1. Tax Reform Timing
•This is a live-fire exercise, but timing is extremely fluid.
•Goal is to get a bill by end of 2017
•Secretary Mnuchin to Financial Times: Getting tax reform done by
August is “highly aggressive to not realistic at this point.”

2. Key Multifamily Priorities
•Overall goal: Tax reform that promotes economic growth and
investment in rental housing without unfairly burdening apartment
owners and renters relative to other asset classes.
•Protect flow-through entities
•Preserve the deduction for business interest
•Retain like-kind exchanges
•Provide for sensible depreciation rules
•Continue to tax carried interest at capital gains rates
•Maintain the Low-Income Housing Tax Credit

3. On the Table: Tax Rates
•Current Law
•Flow-through entity: 39.6 percent max rate
•Corporate: 35 percent max rate
•House Republican Tax Blueprint
•Flow-through entity: 25 percent max rate
•Corporate: 20 percent max rate
•Trump Administration
•15 percent rate for all business

4. On the Table: Investment
Income Tax Rates
•Current Law
•20 percent max rate on capital gains and dividends
•39.6 percent max rate on interest income
•3.8 percent surtax on passive net investment income
•Carried Interest: Treated as capital gain
•House Republican Tax Blueprint
•16.5 percent rate on all investment income
•Carried Interest: Not addressed
•Trump Administration
•Retains current law but repeals net investment income tax
•Carried Interest: Repeal sought

5. On the Table: Cost Recovery
Rules
•Current Law
•Depreciation: 27.5 years
•Interest: Fully deductible
•Like-Kind Exchanges: Available
•House Republican Tax Blueprint
•Depreciation: Full expensing in year of purchase
•Interest: Not deductible
•Like-Kind Exchanges: Proposal silent
•Trump Administration
•Depreciation: No proposal
•Interest: No proposal
•Like-Kind Exchanges: No proposal, but risk it could be
considered a loophole

6. On the Table: LIHTC
•Current Law
•Allows for LIHTC – nation’s only driver of new affordable housing
•House Republican Tax Blueprint
•Silent on LIHTC
•Lawmakers indicate they wish to retain LIHTC
•Lower corporate rate will harm LIHTC without changes
•Trump Administration
•No proposal on LIHTC

7. On the Table: Estate Tax
•Current Law
•Exclusion: $5.49 million
•Rate: 40 percent
•Basis Rules: Step Up
•House Republican Tax Blueprint
•Estate Tax: Repealed
•May retain stepped-up basis
•Trump Administration
•Estate Tax: Repealed
•Basis Rules: Uncertain

8. Tax Reform: Outcomes
•Unclear where tax reform will end up
•Key Questions:
•Does a bill need to be revenue neutral?
•Would Congress be willing to pass a bill that sunsets after 10
years to comply with arcane rules?
•What does Congress want to do about border adjustability and
expensing / interest deductibility?