January 16, 2018
As the new tax plan recently signed into law by President Trump makes its way toward finalization, real estate investors are finding few major downside challenges. However, Marcus & Millichap notes in a special research report, the nuances of the new tax environment could hold subtle, albeit significant implications that investors would be wise to consider.
The plan retained numerous key CRE provisions, and as 2018 unfolds, the uncertainty and caution that pervaded investment decisions in 2017 are expected to fade. The new tax plan offers generous tax cuts to corporations and pass-through entities such as LLCs, and Marcus & Millichap says investors may see the new tax rules as an opportunity to reconfigure their portfolios.
Among Marcus & Millichap’s key findings:
-The 1031 tax-deferred exchange, the mortgage interest deduction for investment real estate and asset depreciation had few material changes. This consistency in tax law will enable investors to move forward with most of their existing investment strategies.
-Changes to carried interest, pass-through income, corporate tax rates and individual tax rates could cause investors to reevaluate their business structures and holdings.
– After-tax yields will become an increasingly compelling attraction of real estate investment. The aggressive depreciation options and reduced taxes on pass-through income will be focal points for investors.
For comments, questions or concerns, please contact Dennis Kaiser