For property managers, many concerns were abated when President Trump hastily signed the highly controversial new tax bill into law on December 22, 2017. As has been noted by others in the industry, the bill was and will continue to be contentious among individuals in both professional and private life. However, there were a few key issues which IREM considered priorities for property management companies, and results on those topics are likely to be applauded across the board.
In a letter sent to IREM members, Director of Government Affairs Ted Thurn confirmed that the new tax bill fulfilled IREM’s biggest policy concerns. He wrote:
“The conference committee bill preserves 1031 like kind exchange for real estate, but eliminates the like kind exchange for personal property. Carried interest has been retained, however a three-year hold period is required to qualify.”
Additionally, the state tax deduction was capped at $10,000 generally, except for state taxes paid on investment property. The corporate tax rate was reduced to 21% from 36%. And notably, the cap on the mortgage interest deduction was reduced 25% from $1,000,000 to $750,000, but this only applies to new loans, so all mortgages already held will remain at the $1,000,000 cap.
While I personally have multiple concerns about this new tax bill for both businesses and individuals, it is important to note that these particular changes and preservations were hard won by organizations such as IREM, and will help the property management and investment property industries in the coming years. Exactly how this new tax structure will affect our overall picture remains to be seen, but myself and IREM will continue watching and doing our best to predict appropriate actions moving forward. In the meantime, we must continue to work for the betterment of the entire economy and all individuals, using the boons this bill has provided to improve the lives of our tenants, employees, and the industry at large.