Commercial Investment Real Estate

JAN-FEB 2018

Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.

Issue link: http://cire.epubxp.com/i/923123

Contents of this Issue

Navigation

Page 42 of 54

COMMERCIAL INVESTMENT REAL ESTATE 38 January | February 2018 During 2017, the country's steady economic growth has supported an environment conducive to keeping the commercial real estate industry humming along. For now, the Internal Revenue Code Section 1031 exchange is safe and will not be repealed, according to Lawrence Yun, chief economist and senior vice president of research at the National Association of Realtors in Washington, D.C. This is welcome news for commercial real estate profes- sionals, since many of them depend on these like- kind property exchanges for a significant portion of their livelihoods. In 2018, ta x reform, infrastructure spend- ing, refinement of the American Disabilities Act, and banking rules remain top of mind for legislation that may benefit the commercial real estate industry. Tax Reform The U.S. Congress did pass tax reform legislation, affecting carried interest and pass-through income. The final tax bill allows for carried interest to be taxed as capital gains at 23.8 percent only for invest- ments held for three years. Otherwise, carried interest will be taxed as ordinary income at rates as high as 39.6 percent. The pass-through income was changed to a 20-percent deduction for nonpersonal service busi- nesses. As of Jan. 2, 2018, NAR policy advisers need clarification about whether commercial real estate would be considered a personal service business. One exception to the Tax Act is an income exemption if a commercial real estate professional files tax returns for under $157,500 for single or $316,000 for couples. In the worst case scenario, pass-through income will remain status quo, according to Erin Stackley, senior policy representative for commercial issues at NAR in Washington, D.C. "The Tax Act of 2017 is a mixed bag for commer- cial real estate professionals," Stackley says. "Gener- ally, it is positive, with gains in carried interest. We believe real estate brokers may be considered part of personal services industry, but we need further guid- ance from the Internal Revenue Service." Infrastructure Spending Aer tax reform, infrastructure spending is the next high priority. If $1 trillion were invested in our crum- bling infrastructure over the next 10 years, the U.S. economy would benefit and so would all sectors of commercial real estate. The challenge, however, is how the U.S. will pay for it. Generally, Democrats believe tax payers should pay Will the two parties reach consensus on infrastructure? LEGISLATIVE OUTLOOK 2018 by Sara S. Patterson

Articles in this issue

Archives of this issue

view archives of Commercial Investment Real Estate - JAN-FEB 2018