The Impact of Tax Reform on the Commercial Real Estate Industry

April 10, 2018

Submitted by Stacia Neugent, GreerWalker

In December of 2017, Congress passed the first major overhaul of the United States tax code in over 30 years. At CREW Charlotte’s April luncheon, Bobbi Jo Lazarus of Elliott Davis and Stacia Neugent of GreerWalker discussed with attendees the impacts of tax reform on both businesses and individuals alike.

Margaret Martin of CBC Meca opened the luncheon by discussing how tax reform was intended to provide simplification but this wasn’t necessarily the case for all taxpayers. Changes such as the increased standard deduction, lower tax rates and an increased threshold for Alternative Minimum Tax (AMT) may actually simplify tax return filing for many individuals. However, for individuals with ownership of pass-through entities such as partnerships or S-corporations, this simplicity will likely be offset by the complexity of a new Qualified Business Income (QBI) deduction.

For business entities, presenters focused on the newly created interest expense limitation and the increased three year holding period for carried interests – interests in a partnership that are often issued to investment managers in exchange for the services they provide. Additionally, owners of businesses will need to consider the change in the deductibility of entertainment expenses.

The presenters emphasized that there is still a lot of clarification needed regarding many of the new tax provisions. With all of the uncertainty, there are still several opportunities for planning surrounding the new tax laws. One thing is for certain, you should consult your tax advisor to determine the impact to you and your business.

You can see a summary of some of some of the most applicable tax changes here.

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