LANGUAGE REMOVED FROM
“TAx ExTENDERS” BILL
Over the last several months, IREM Members have lobbied
their members of Congress on the issue of tax treatment of
carried interest. This issue is critical to both the recovery of
commercial real estate and the overall economic recovery.
In May, 265 members of IREM and CCIM
Institute participated in a joint visit to Capitol Hill,
lobbying their federal lawmakers on issues affecting the commercial real estate industry. Tax treatment of carried interest was a key issue presented.
Under consideration was legislation known as the “Tax
Extenders Package” (H.R. 4213). The bill aimed to extend
certain Bush era tax cuts and fund an extension of unemployment benefits set to expire. However, it also carried a
price tag of $127 billion, and would have added $84 billion
to federal deficit over the next decade.
In order to fund the extensions, Congressional members included $43 billion of tax increases—including a
provision to change the tax treatment on carried interest from capital gains to ordinary income. This would
raise the tax rate on carried interest from 15 percent
to as high as 39. 5 percent, adding further stress to the
already overburdened commercial real estate industry.
On May 14, 2010 and June 2, 2010, IREM initiated a Call to Action, urging members to contact their
federal lawmakers and ask them to oppose the carried interest provision in the Tax Extenders Package.
Following the Calls to Action, IREM legislative staff
received an overwhelming number of e-mails and
phone calls from members who had contacted their
legislators and expressed their opposition to the bill.
Your efforts and consistent involvement in the carried interest tax issue have not gone unnoticed. In fact,
because of your swift action, the Carried Interest language
was completely removed from the “Tax Extenders” bill
(H.R. 4213, later changed to “The American Jobs and
Closing Tax Loopholes Act of 2010”) before it passed
the U.S. Senate on July 20. Despite this tax issue being
defeated four times, we believe this issue may arise again
in the distant future. IREM legislative staff will continue
to monitor this issue and report back when necessary.
In June, the U.S. Environmental Protection Agency (EPA)
issued an amendment to the final Renovation, Repair and
Painting Rule (RRP Rule), effective April 22, 2010. The
RRP Rule requires contractors who work in residential
buildings built before the 1978 outlaw of lead based paint
be certified by a government-approved trainer and follow
particular safety rules. The ruling aims to reduce the
amount of lead dust created during home renovation and
repair, and affects tens of millions of homes, including
The RRP Rule requires certified firms engaging in
repair, renovation or painting activities that disturb lead
based paint be certified by the EPA. Some of the requirements outlined in the RRP Rule include distributing information to building occupants, notifying them of the work
being conducted; obtaining written certification from the
adult occupant that the information has been received;
postage of signs defining the work area; isolation of
the work area by covering all ducts with taped down
plastic; closing windows and doors, and covering them
with plastic sheeting; covering the floor with taped down
plastic; negatively pressurizing the work space; storing
daily waste under containment that prevents the release
of dust; disposing of the waste in a sealed bag approved
by the EPA; placing all waste in a lined container; and
disposing of it into an EPA approved site.
Following an outcry from industry groups including
IREM, politicians and homeowners—all claiming the
new rule would drive up development costs and derail
economic recovery—the EPA postponed enforcement of
the RRP Rule’s certification requirement until October
1, 2010. The EPA will also not take action against individual renovation workers who have applied to enroll
in, or have enrolled in, a certification class no later than
September 30, 2010. Renovators must complete training
by December 31, 2010.
You may access the RRP Rule Memorandum issued by
the EPA at www.epa.gov.