Real Estate Investors are Big Winners with the Coming Tax Overhaul

With so many tax related articles out there, it’s tough to cut through the jargon to figure out who the big winners and losers are. But one group in particular appears set for some big advantages: real estate investors. If you own property, you should read this blog post from Revathi Greenwood at Cushman & Wakefield and their report The Great Tax Race: How the World’s Fastest Tax Reform Package Could Impact Commercial Real Estate. Her blog provides a great summary of what impacts the changes will have on each sector of the real estate industry and the broader economy. The report goes much deeper. If you’re interested in details, it’s good information.

Here’s a quick summary of what you’ll find in these articles:

  • Real estate investors will mainly benefit through changes to tax rates and pass-through entity income deductions
  • Many of the most adverse provisions, such as limitations on interest deductions and 1031 exchanges, are exempt for real estate investments
  • Multifamily and single family rentals will likely see a boost at the expense of home ownership due to limits placed on property tax deductions
  • High tax states such as California, New York, and Illinois may see long-term pain as cost-of-living increases drive residents away as limits on deductions for state and local taxes hit taxpayers’ wallets
  • Other real estate sectors such as retail and industrial may also see some positive results as small businesses benefit from tax rate reductions

Overall, commercial real estate is a big winner but much depends on the final bill that passes next week.

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