Steven Meier and John Napoli, co-chairs of Seyfarth's Tax practice, will be presenting the Strafford webinar, "Tax Reform: Impact on REITs, Real Estate Businesses and Investors," on June 5, 2018 from 1:00 PM - 2:20 PM EDT.
In Dec. 2017, the final tax reform bill became law. Although many of the law changes that carried the potential to disrupt real estate capital markets expectations were specifically designed not to apply to real estate businesses, other changes impact REITs and other real estate businesses and their investors. Real estate counsel should be conversant on these changes.
Tax reform maintains like kind exchanges for real estate and retains the ability of real estate trades and businesses to deduct net interest expense. It also creates a new 20% tax deduction for pass-through businesses and revises the rules regarding cost recovery. It amends Code §179 to increase deduction thresholds and expands on the types of improvements which may be expensed. Historic tax credits have been scaled back, while low income housing tax credits are unaffected.
Holders of carried interest in certain types of partnerships, including private equity and real estate funds, must now hold the interest for three years to receive long-term capital gain treatment. Correcting what many thought was the wrongly decided Grecian Magnesite Mining Tax Court case, gain or loss from the sale of a partnership interest by a foreign partner as effectively connected income (ECI) is taxable in the U.S. and imposes certain withholding requirements on the purchaser.
The panel will provide real estate counsel with a working knowledge of the new tax reform law as it relates to REITs and other real estate investment structures, and will include the impact of tax reform on pass-through deductions, cost recovery, carried interest, existing tax credit programs and more.
Key issues discussed will include:
What impact should tax reform be expected to have on the commercial real estate industry?
What impact could the new pass-through business deduction and the reduction in corporate income tax rate on entity choice in real estate businesses?
How might the new cost recovery and §179 affect property improvements and expenditures?
Will the new rules on carried interest have any impact on investment structuring?