The bill is a strong bipartisan effort and a sign that the muscle for comprehensive immigration reform is getting stronger on both sides of the aisle as momentum builds. The bill would would provide a path to U. According to the National Immigration Forum: This bipartisan bill offers a practical solution.
Summary REITs are impacted by a number of changes in the new tax law. Changes to the treatment of pass-through entities, interest deductions, partnership terminations, and expensing all provide benefits to REITs.
A range of beneficial credits and deductions already in use have also been preserved.
The law will likely spur further investment in real estate, including REITs. The changes are not so great as to change the outlook for the sector in and REITs will likely remain in a defensive posture. The last time an omnibus tax reform passed into law, it was not a good day for the REIT sector.
The Tax Reform Act of did many things to simplify the tax code, but it also placed strict limitations on loss deductions from passive investment activity, in addition to other restrictions that took away some of the tax perks of investing in REITs.
Thankfully for the REIT investors of today, history has not repeated itself. I have written already how new pass-through deductions will benefit property investors.
And while there are many businesses and industries that make wide use pass-through structures, REITs get special treatment. Specifically, businesses using the pass-through deduction have a cap on the amount they can deduct, based on wages paid by the business and by value of property acquisitions.
REIT dividends have been excluded from the wage restriction, fortunately for income investors. REITs also benefit from an exception carved out in the new rules concerning business interest deductions.
However, opting out comes at the price of a longer cost recovery period for property. This gives REIT firms a degree of greater flexibility and stability that the old rule could occasionally threaten. Many Blessings Sustained There are a few benefits that REITs have enjoyed under the previous law that have been preserved in the new tax regime.
State and local tax deductions have been preserved for pass-through entities, such as REITs, that accrue those liabilities through the conduct of business that generates income. Thus REITs are protected from caps on local deductions that will affect, among other things, homeowners.
Credits for low-income housing and for preservation and rehabbing historic buildings have also been retained, though the latter is now more restrictive than under previous law. There is no earth-shattering change that will transform the industry, but REITs will benefit from the range of new provisions and deductions, and investors will no doubt be taking note as we pass into The REIT industry itself is unlikely to shift its apparent focus on consolidation and refinancing over new acquisitions.
We remain in a bull market that is quite long in the tooth, and REIT operators are well aware of the risks of making purchases when property prices continue to test new highs.
REITs will undoubtedly benefit from the new tax reform, but the advantages will likely be put to use to bolster the prevailing conservative attitude within the industry rather than alter it meaningfully. I wrote this article myself, and it expresses my own opinions.
I am not receiving compensation for it other than from Seeking Alpha. I have no business relationship with any company whose stock is mentioned in this article. Follow John Engle and get email alerts Your feedback matters to us!
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January 8, President Trump signed the Tax Cuts and Jobs Act (the New Tax Law) into law on December 22, The key provision in the New Tax Law was the reduction of the maximum corporate tax rate from 35 percent to 21 percent. In addition, there are a few key changes to business tax . Yesterday, the House and Senate delivered yet another signal that the political tide for immigration reform is getting stronger with their introduction of the Development, Relief, and Education for Alien Minors (DREAM) Act [Senate] and the American Dream Act [House].
The bill is a strong. Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. How will the new tax law impact the real estate industry and the investment entities that fuel its growth?
Learn more about the provisions in the approved tax bill that are likely to affect real estate investment trust (REITs) and their counterparts.
The enactment of tax reform legislation. Following the approval of the federal tax reform bill much of the discussion has centered on the legislation’s disproportionately negative impact on tax-heavy states and the anticipated influx.
The Bipartisan Campaign Reform Act of (BCRA, McCain–Feingold Act, Pub.L. –, Stat. 81, enacted March 27, , H.R. ) is a United States federal law that amended the Federal Election Campaign Act of , which regulates the financing of political iridis-photo-restoration.com chief sponsors were Senators Russ Feingold (D-WI) and John McCain (R-AZ).