Q&A with Anchin’s Marc Wieder: Tax Reform’s CRE Implications

Anchin in the NewsApril 2, 2018Published by Connect Media
Anchin Partner Featured: Marc Wieder, CPA

Q&A with Anchin’s Marc Wieder: Tax Reform’s CRE Implications

The Tax Cut and Jobs Act signed into law by President Trump in December presents some new considerations that commercial real estate industry members will want to think through. Anchin’s Marc Wieder, who will give a special presentation on the tax law changes at Connect NY on April 17, offers insights here on the potential impact.

Q: The Tax Cuts and Jobs Act certainly represents a sweeping overhaul of the tax regime. For commercial real estate owners and companies, were there any major surprises to the upside or downside?

A: The greatest surprise is the excess loss limitation that I don’t think many people are focusing on. On the upside, the allowance for real estate to deduct 100% of their interest expense, with a catch to it.

Q: What provisions of the TCJA are most likely to impact CRE owners and companies?

A: I don’t think there is only one. I believe that bonus depreciation, Section 179, Interest deductions, and the pass-through deduction are the most significant, and of course the excess loss limitation.

Q: Are there less-familiar provisions that might also come into play?

A: First off, one must consider the effect of one provision on another, and as mentioned, excess loss limitation is probably the one that is least familiar to most taxpayers.

Q: What was Congress’ thinking behind the change in hold periods for capital gains property from one year to three years?

A: The change only relates to carried interest. I think that Congress felt that they needed to address the carried interest issue, and unless they proposed some change, they would get backlash, although this change is insignificant to most.

Q: Finally, will real estate owners and companies have to do more planning than before in order to take full advantage of the benefits in TCJA provisions?

A: They need to look at the effect of certain decisions they make at the entity level, and see what impact that has on their partners. This can result in many variations of projections.

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