CoStar: CRE industry leaders who worried that the largest rewrite of the U.S. tax code in more than three decades would eliminate like-kind 1031 exchange transactions or curtail the ability of businesses to write off interest and debt expenses breathed a collective sigh of relief last week after House Republican leaders outlined the major components of their long-awaited bill.
The Tax Cuts and Jobs Act (H.R. 1), released last week by the U.S. House of Representatives Ways and Means Committee, also retains existing rules for writing off depreciation of commercial property, while reducing the tax burden on all businesses.
“If the final bill is similar to the one introduced today, our industry will put more people to work modernizing and improving existing properties – office buildings, shopping centers, apartments, industrial properties – to meet the changing and growing needs of American businesses and consumers,” Real Estate Roundtable President and CEO Jeffrey DeBoer said in a statement
The proposal reduces the corporate tax rate from 35% to 20% for tax years beginning after 2017 and repeals the corporate alternative minimum tax.
In a bulletin, the CRE Finance Council (CREFC) described the retention of interest deduction, 1031 exchanges and existing cost recovery and depreciation rules as “major steps in the advocacy effort to allow for continued CRE market liquidity and supply/demand balance.”
While CREFC remains skeptical that House leadership can meet its aggressive goal of getting the bill to the Senate before the Thanksgiving holiday due to its size and complexity, the group expects a flurry of Congressional activity up until the holiday.
“We caution that uncertainty will be the order of the day until the bill either advances to the Senate (which is working on its own legislation) or gets stymied by member opposition,” the group said.
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