Home builders split on tax break

A fight within the National Association of Home Builders, one of the nation’s largest trade groups, is coming to a head, and the outcome could refocus the industry’s lobbying efforts at a critical time for the housing market. Tensions between large and small builders have escalated in recent weeks over the trade group’s position on a lucrative tax break sought by the large companies. Jerry Howard, the NAHB’s longtime chief executive, and some small builders have raised concerns that the big builders would abuse the break, igniting a firestorm that could cost Mr. Howard his job.

The tax break involves so-called net operating losses. The big builders have been lobbying Congress for more than a year to allow companies to apply current losses against profits made five years ago, instead of the current two-year carry-back. Small builders would also benefit from expanding the carry-back to five years. The measure had been part of the $787 billion economic stimulus plan, but it was revised at the last minute to let only small companies, including very small home builders, use the five-year carry-back.

The large home builders and some small builders were outraged that Mr. Howard wrote a letter to House Speaker Nancy Pelosi amid debate over the stimulus, expressing concern that large builders might abuse the tax break to dump land at discount prices to generate a tax loss and then buy the land back when the market recovers, putting some smaller builders at a disadvantage.