Rising Trends

March 27, 2018

What's on the Real Estate horizon due to the Tax Act?

  • Transactions with REITs will be much more popular


Ken Weissenberg:

During transactions, using REITS is going to become much more popular under this law. Certain items of income which on a flow through basis would not be subject to the 20% deduction, would be subject if they’re held through a REIT. This would include income that qualifies as good REIT income such as, mortgage interest and income from property that is not subject to depreciation, like the Brown-List. 

So, if that income is earned directly it's subject to the top bracket, at 37%. And certain expenses and carrying on those activities, which would normally be treated as investment expenses, wouldn't be deductible for individuals. If it's income earned by a REIT, one, your net owner's expenses against that income so you get the benefit of the deductions and, two, the income is subject to the 20% discount for tax based on the 199 Cap A Deduction. So REITs are going to become much more popular in planning going forward.

About Kenneth Weissenberg

Kenneth Weissenberg CPA, Tax Partner in Real Estate Services, is experienced in tax saving strategies and negotiating sales and acquisitions. He represents owners of some of the most well-known real estate properties in New York City.

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