The new tax law contains some great news for commercial real estate investors, putting more money back into their pockets. There are several benefits to be reaped, particularly for investors with a high net worth. Paul Moore outlines the details in this article:
Multifamily (and other commercial) real estate investors got a beautiful holiday present when the President signed the new tax law into effect in late December. Commercial real estate investing had already been provided among the most powerful tax breaks available in the U.S., but the new rules make it even sweeter.
Significant Tax Benefits
One of the most notable benefits in the tax bill for real estate investors is the change in the way pass-through income is taxed. The change applies to ownership via LLC and partnerships, but it also applies to investors in public and private real estate funds. Owners of pass-through entities may be eligible to claim a 20 percent deduction for business-related income.
The tax treatment of capital expenditures is another key win. The tax code has historically limited the deduction for capital expenditures in the current tax year, but the new law significantly expands the allowance. This can be a great way to shield income as you invest in improvements.
Another aspect of the new tax law that may potentially impact commercial real estate investors is the change in the standard deduction. Here’s what Moore says:
In addition to these direct benefits to multifamily syndicators and investors, a less obvious but very powerful multifamily benefit is the doubling of the standard deduction for tax filers … John Isakson, chief capital officer at Preferred Apartment Communities, says doubling the standard deduction is going to “keep people who rent renters for longer because it takes away one of the bigger incentives to own a home.”
Tax-Deferred 1031 Exchange Maintained
Although many asset types lost the benefit of the tax-deferred 1031 exchange in the new tax law, real estate did not. This is a big win for you as an investor.
It’s a great time for commercial real estate Eugene. Multifamily properties can make excellent investments, and the new tax laws confer additional benefits. The professionals at Pacwest Commercial Real Estate are your local commercial real estate experts. You can reach them at 541-687-5871.