In December, at the same time it was voting on the fifth COVID-19 relief package, Congress passed a federal spending bill—the Consolidated Appropriations Act of 2021—that included several NAR-supported provisions.
- 179D energy-efficient buildings deduction. Congress made 179D a permanent part of the tax code, with some updates. Since 2006 the provision has allowed commercial property owners to deduct up to $1.80/square foot for qualifying energy-efficient improvements. Going forward, the deduction will be indexed for inflation. The act requires that the ASHRAE (American Society of Heating, Refrigerating, and Air Conditioning Engineers) standards that govern the deduction be updated.
- PPP-paid business expenses. In spring 2020, the IRS issued guidance stating that expenses paid with forgiven PPP loan money would not be tax deductible. The guidance would have resulted in struggling small businesses having to use valuable resources to pay tax on expenses not normally taxed. Congress clarified its intent that such expenses be deductible, and the IRS has since reversed its ruling.
- Low-Income Housing Tax Credit. Congress created a permanent 4% floor for the portion typically used for rehabilitation of older rental housing and the preservation of subsidized rental developments.
- Employee Retention Tax Credit. The ERTC was extended through June 30, 2021, and modified, increasing the credit rate from 50% to 70% of qualified wages and expanding eligibility by reducing the year-over-year gross receipts decline from 50% to 20%. The act increased the limit on per-employee creditable wages from $10,000 per year to $10,000 per quarter, increased the 100-employee delineation to 500 or fewer, and allowed businesses with PPP loans to qualify.