March 25, 2020
The historic $2-trillion economic stimulus bill agreed upon by House and Senate leaders early Wednesday morning in response to the COVID-19 pandemic has a number of positive implications for commercial real estate, according to NAIOP analysis. Among them is a technical correction to the Qualified Improvement Property provision in the 2017 Tax Cuts and Jobs Act.
QIP is now available for immediate expensing, rather than subject to the 39-year depreciation period that made it into the TCJA through a drafting error.
“This correction is a top NAIOP federal priority and its inclusion is a result of our efforts over the last two years,” NAIOP president Thomas J. Bisacquino said in a note to association members.
Other provisions of interest to CRE in the $2-trillion stimulus bill, according to NAIOP:
• Allows 5-year carryback of net operating losses (NOL) for non-REIT businesses for 2018, 2019 and 2020.
• Increases the limitation on deductible business interest from 30% to 50% of EBITDA (earnings before interest, taxes, depreciation, amortization) for 2019 and 2020.
• Excludes from income the cancellation of debt related to new, emergency small business loans.
• Provides small businesses, “many of whom are your tenants,” with $367 billion in loan assistance so they can keep employees on payrolls and continue paying obligations.
Additionally, says NAIOP, the legislation would provide direct payments to many individuals and families, extend unemployment insurance and shore up social safety net programs.
For comments, questions or concerns, please contact Paul Bubny