Last month's tax cut extension legislation (H.R. 4853), which extended the Bush-era tax cuts may have been controversial, but they brought some good news for the apartment and building industry, according to industry associations.

In a joint statement, the National Apartment Association and National Multi Housing Council said that the highlight of the bill was something that it didn’t do—increase carried interest taxation. The scheduled increase in capital gains from 15 percent to 20 percent was averted. Instead, the 15 percent rate will remain in place.

“The bill also omits a crushing increase on carried interest, which would have devastated the industry by reducing the number of dollars available for investment,” the NMHC said in a written statement to Multifamily Executive.

The industry will also enjoy some other benefits extended to businesses, including bonus depreciation and the payroll tax credit. Bonus depreciation allows full expensing for plant and equipment (for property that’s appreciated over 20 or fewer years) for 2011 an up from 50 percent bonus depreciation in 2010. The payroll tax credit provides a 2 percent paying roll tax decrease in 2001, which reduces employee’s payroll tax from 6.2 percent to 4.2 percent.

Estate taxes were another concern the associations without the extension. “The tax bill provides for a $5 million estate tax exemption and a 35 percent top rate, which is far better than many were expecting just a few months ago when some even thought the estate tax could return to just a $1 million exemption and 55 percent top rate for 2011,” the NMHC said in its statement.

NAA and NMHC report that inherited commercial real estate assets are expected to be subject to stepped-up basis rules, instead of the carryover basis rules in 2010. “That said, for 2010, taxpayers may elect to use 2011 estate tax rules and take advantage of stepped-up basis for inherited assets if they choose not to take advantage of full repeal that comes along with carried over basis,” the associations said in a joint report.

The bill also extended Energy Efficient New Homes Tax Credit, the New Markets Tax Credit, and brownfields expensing, while also renewing a program that allows the Treasury to pay cash grants in lieu of energy tax credits.

The one major defeat for the housing industry in the bill was the absence of an extension for the Tax Credit Exchange Program (TCEP), which included in The Stimulus Bill to allow the Treasury to remit Low-Income Housing Tax Credits in the form of cash (GoZone low-income housing credits are extended by a year though).

Of course, for an industry that depends on a healthy economy driving consumer demand, the best news may be that it gives consumers more to spend on housing. Through 2011, it provided an estimated 21 million middle-class households and small businesses relief from the Alternative Minimum Tax (AMT). In 2010, individuals can exempt $47,470 ($72,450 for couples filing jointly) in income from the AMT, according to the National Association of Home Builders. Those exemption amounts will increase to $48,450 and $74,450, respectively, in 2011.

“Forestalling a tax increase should help to promote a continued economic rebound,” the NMHC said

Finally, while the bill took many positive steps, it is only effective for two years. Accordingly, Congress should use the next two years to provide long-term certainty with respect to the nation’s tax laws in a way that does not disadvantage multifamily housing relative to other economic sectors.