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The Silicon Valley Association of REALTORS® joins other local and state REALTORS® associations and the National Association of REALTORS® (NAR) in praising Congress for passing and the President for signing into law sweeping legislation of more than 2,000 pages to fund the Federal Government for Fiscal Year 2016. The new legislation will put an end to the series of stop-gap funding measures known as “Continuing Resolutions” that have funded the government since the start of FY2016 on October 1, 2015. This new bill will expire in September 2016.

A significant piece of the tax legislation includes the extension of a number of expired tax provisions important to supporting homeowners and real estate investment, such as Mortgage Debt Forgiveness, Mortgage Insurance Premium Deductibility, Immediate Expensing of Business Equipment and Certain Real Estate, Charitable Deduction for contributions of real property for conservation purposes, Foreign Investment in Real Property Tax Act (FIRPTA), Energy Tax Credit for New Homes, National Flood Insurance Program.

NAR sent a letter to House and Senate tax-writing committees as the final package was being developed to ask for support on maintaining these key provisions. “These tax extenders offer critical support for consumers, homeowners, commercial property investors and small businesses alike,” said Tom Salomone, 2016 NAR president. “We’re grateful for the leadership shown on this important piece of legislation and look forward to continuing our work in support of homeownership.”

Extending tax relief for mortgage debt forgiveness as a win for REALTORS®, according to Salomone, because this provision protects underwater homeowners from incurring a large tax bill on phantom income in connection with a workout or a short-sale. Since 2007, this tax relief has strengthened individual communities and the broader economy as more distressed homeowners were offered the flexibility to responsibly address an underwater mortgage. The tax extenders deal offers an additional two years of protection covering tax years 2015 and 2016.

The bill also includes a permanent extension of a 15-year cost recovery period for the depreciation of qualified leasehold improvements. This provision ensures that a commonsense cost-recovery period remains permanently in place for improvements made to nonresidential commercial property.

The real estate-related provisions likewise include the renewal of certain incentives to promote energy efficient commercial and multifamily buildings. Similarly, an expired tax credit of between $1,000 and $2,000 for energy-efficient new homes is extended for an additional two years under the bill.

The legislation permanently extends rules allowing small–and mid–sized businesses to immediately expense business equipment, rather than depreciate the equipment over several years. This is important to Realtors who are independent contractors and purchase new computers, copiers, cameras and even vehicles in the course of doing business.

Finally, the tax bill includes changes to the Foreign Investment in Real Property Tax Act (FIRPTA) that will ease restrictions on investment in commercial real estate.