New Tax Laws Hold Modest Change for Investment Commercial Real Estate - Alterra Real Estate Advisors LLC

 

A final tax reform bill moved closer to the President’s desk, following a vote by both the House and Senate to send the bill to conference to work out the remaining differences. Congress envisions completion of negotiations by the two legislative chambers by December 15, with a vote on the conference agreement the week of December 18, and the bill being sent to the President by December 22.

For real estate investors, the final versions appear relatively benign, with only modest changes to key provisions such as the 1031 tax-deferred exchange, mortgage interest deductibility and asset depreciation. Thus far, neither version holds any significant changes that will radically impact real estate investment.

The new tax structure will apply to 2018 income for tax filings in 2019.

Key findings:
– Few substantive changes to 1031 tax-deferred exchanges, business interest deductibility or depreciation rules widely considered positive by investors.
– Changes to carried interest, pass-through income, corporate tax rates and individual tax rates could cause investors to reevaluate their business structures and holdings.
– Changes to tax rules and deductions could impact demand for apartments, student housing and healthcare real estate specifically.

Published December 11, 2017- Connect Media Group

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