House Republicans Release New Tax Package–Includes Retirement, Savings, and Other Tax Relief Act of 2018 and Taxpayer First Act of 2018
Confirms that the 20% Deduction for Qualified REIT Dividends Applies to Mutual Fund Shareholders
Last night, House Ways and Means Committee Chairman Kevin Brady (R-TX) released a nearly 300-page tax package. The proposed legislation contains tax extenders, retirement and other savings enhancements, IRS administrative improvements, disaster relief, and a limited number of technical corrections to last year's tax reform bill (known as the Tax Cuts and Jobs Act or TCJA).
Included in the technical corrections section of the proposed legislation is a provision confirming that the section 199A 20% deduction applies to qualified REIT dividends received by mutual fund shareholders. Also included is a provision confirming that tenant improvements such as new lighting or flooring (so-called "qualified improvement property") has a depreciation recovery period of 15 years (and a 20-year recovery period under the "alternative depreciation system" for earnings and profits purposes), and is therefore also entitled to 100% bonus depreciation. These provisions would be effective as though included in the original TCJA.
Congress is now in a "lame duck" session, with both the House and Senate controlled by Republicans. Democratic control of the House does not take effect until January. While the House could pass this legislation with a simple majority, 60 votes would be needed to advance the legislation in the Senate, meaning at least some Democratic votes would be required. Reportedly, a House vote on this legislation may occur as soon as the end of this week.
Most observers expect that Congress will likely only pass one major bill in the coming weeks, including funding for the government past the Dec. 7, 2018 deadline set by previous budget legislation.
It is unclear to what extent any tax provisions will be included in year-end legislation. Nareit will continue to monitor developments and keep you informed.