In This Section
MBA worked with government regulators to secure additional clarification on the Tax Cuts and Jobs Act Section 199A, securing an important tax deduction for most IMBs.
Overview: MBA encourages policymakers to support and enact tax laws that support long-term economic growth, which is the foundation of strong real estate markets. On December 22, 2017, President Trump signed H.R. 1, the Tax Cuts and Jobs Act (TCJA) into public law. While many of the TCJA changes impact all businesses alike (regardless of the specific industry), this comprehensive new tax law has numerous provisions that unambiguously affect the real estate finance industry. MBA supported elements of the TCJA that provided both homeowners and renters with more "take home" pay by lowering overall tax rates and nearly doubling the standard deduction. MBA advocated for its members on many important issues during the tax reform debate.
MBA Achieves Victory for IMBs on Pass-Through Deduction
MBA is celebrating a major win for IMBs eligible for the new 20% "pass-through" deduction included in the Tax Cuts and Jobs Act (TCJA) of 2017. MBA worked extensively with Treasury and IRS to clarify the eligibility of IMBs for this deduction. On Jan. 18, the government provided the clarification confirming MBA's position on IMBs. The guidance confirmed that IMBs who originate their own loans are not "specified service trades or businesses", and are eligible for the deduction. The regulations are complicated, so MBA advises IMBs to work with their advisors to determine how the rules could impact their individual businesses- especially those engaged in correspondent lending. MBA's advocacy efforts included:
- Letters to the Treasury Department and IRS providing feedback on the provision, and advocating for IMBs to be eligible for the deduction as intended by Congress;
- Meetings with Congress, the Office of Management and Budget, and Treasury/IRS to help them understand the IMB structure and functions;
- Calls with MBA members to solicit feedback as well as ensuring open communication channels on the topic.
MBA will continue to assist members with advice on implementing the final regulations and solicit additional clarity from the IRS if needed.
Recent MBA Activity Related to Tax Issues
- Joint Trades Letter: Coalition Letter to House Urging Tax Extenders (June 19, 2019)
- Joint Trades Letter: Coalition to US House to Reject Carried Interest Fairness Act (March 26, 2019)
- Fact Sheet: MBA Summary of Pass-Through Deduction (Sect. 199A) Guidance from Treasury (January 20, 2019)
- Comment Letter: MBA to IRS on Proposed Regulations on Investing in Opportunity Zones (December 21, 2018)
- Comment Letter: MBA to IRS on Proposed Rulemaking for Pass-Through Deduction (Sect. 199A) Implementation (October 1, 2018)