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How tax reform will benefit President Trump’s real estate investments

During a speech in St. Charles, Missouri, in late November ... the overall contours suggest President Trump and other wealthy real estate developers (as well as their accountants) will likely be quite happy. Here are the different ways tax reform benefits ...

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menu more-arrow no yes Log In or Sign Up Log In Sign Up Cities Topics Handbook Shopping Guide More Cities Atlanta Austin Boston Chicago Detroit Hamptons Los Angeles Miami New Orleans New York Philadelphia San Francisco Seattle Washington DC Topics Architecture Interior Design Tiny Homes Prefab Home Tech House Calls For Sale Longform Maps Handbook Shopping Guide ? Real Estate How tax reform will benefit President Trump’s real estate investments New, 1 comment A certain family business stands to gain from provisions of the tax reform package By Patrick Sisson Dec 7, 2017, 4:32pm EST tweet share pin Trump Tower in Chicago Shutterstock President Trump has been bullish on the many different ways tax reform will supercharge the economy, make U.Scompanies more competitive, and continue the stock market’s record riseHe’s also said, multiple times, that the legislation, currently in reconciliation between House and Senate leaders, won’t offer any advantages to himself. During a speech in StCharles, Missouri, in late November, the President said both his wealthy friends and his accountants were “going crazy” due to tax reform, and that they’d lose out due to changes in rates and deductions“The rich people actually don’t like me,” he said President Trump on tax reform: "My plan is for the working people, and my plan is for jobsI don't benefit"— NBC Politics (@NBCPolitics) September 27, 2017 Now that bills have passed both houses, offering a better sense of how the Tax Cuts and Jobs Act will ultimately impact tax breaks, rate reductions, and deductions, it’s clear President Trump may not have as much to worry about as he previously suggested. While details vary between the House and Senate bills, the overall contours suggest President Trump and other wealthy real estate developers (as well as their accountants) will likely be quite happyHere are the different ways tax reform benefits real estate moguls and big developers. Lowering taxes on pass-through businesses Pass-through businesses—partnerships, S-corporations, and limited liability companies (LLCs)—are corporate entities that allow business income to “pass-through” to the owner, thereby paying a personal income rate, as opposed to a business rate The Trump Organization, which owns more than 500 such entities, would see their annual tax bills drop, due to a rate cut from near 40 percent to 25 percentMany of the most lucrative parts of the Trump Organization’s real estate empire—rental income, royalty payments, and licensing fees—are organized as pass-through businesses Property development deductions and commercial real estate breaks Both bills also contain a number of deductions and breaks that would particularly help real estate developersAccording to a Washington Post analysis, both bills would allow developers to deduct interest expenses for a variety of real estate activities, including construction, management, and property development A House provision would repeal “like-kind exchange,” an exemption that lets a business avoid taxes if it reinvests profits in another business, except in the case of commercial real estate developmentA New York Times analysis suggested this switch would allow owners of commercial real estate to “keep flipping the properties until they die without ever paying any capital gains tax.” Finally, the bill would also allow golf course owners to claim a deduction if they promise to never build on land that they own, a big benefit for a company that owns a dozen courses in the United StatesKnown as the conservation easement, this break is already part of federal tax law, but has been derided by lawmakers, and some observers thought it might get eliminated in the current reform push. Eliminating the Alternative Minimum Tax (AMT) This mechanism put a minimum on how much wealthy individuals would pay, in effect limiting the number of deductions that could be claimed by taxpayersAccording to an analysis by Time of the leaked 2005 Trump tax return, the AMT increased his final tax bill by $31.2 million that yearDue to a mistake in drafting the proposed bill, the AMT would negate additional corporate deductions if is was to become law; Congressional observers believe it will be corrected before final passage In addition, plans to eliminate or sharply curtail the estate tax will give wealthy families the ability to pass along assets and wealth to children, a huge tax savings for someone with extensive wealth who may want to pass the family business to his or her heirsBloomberg estimated this changed could save Trump more than half a billion dollars, based on an estimated net worth of $3 billion. Not every one of the proposed changes would benefit developers like TrumpSome, such as the elimination of the Historic Tax Credit, would add substantial costs to his companyThe Trump Organization is currently seeking those credits to offset $40 million in costs for the transformation of Washington, D.C.’s post office into a Trump Hotel The final shape of the bill is yet to be determined, so nothing has been finalizedBut if, as many expect, these broad contours do become law, it’s clear wealthy real estate developers will find plenty of benefits to get excited about Next Up In Real Estate Tax bill amendment puts artist housing in jeopardy Real estate crowdfunding expands into more niche markets New Pocket Listing Service racks up $1.4 billion in listed properties WeWork buys social network Meetup to bring more people to its spaces Home sales spike in October as Houston, Florida rebound 3 historic stone houses for sale right now Trending Stunning 1900s Hawaii estate on 60 acres asks $3.8M Located on 60 acres in the Upcountry region of Makawao in East Maui, Hawaii, is this incredible historic estate built by Henry Alexander Baldwin and his wife Ethel. 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The Latest 25 creative gingerbread houses to inspire you this holiday season ll you need to build your dream house are a few slabs of dried-out gingerbread cookies, plenty of frosting, and a singular vision. Lauren Ro 1 comment / new Swedish electric car starts at $17,500, comes with 5 years of free charging The new compact "smartphone car" can be reserved with a $175 deposit. Barbara Eldredge 1 comment / new Rent this very authentic-looking hobbit house Tiny-house entrepreneur Kristie Wolfe built one of the most authentic-looking hobbit houses we’ve seen—and it’s available to rent. Lauren Ro 2 comments / new Tax bill amendment puts artist housing in jeopardy The change could have implications for affordable housing as a whole as well. Jeff Andrews 1 comment / new This DIY geodesic dome goes anywhere UK-based Build With Hubs makes owning your own geodesic dome even easier by selling ready-to-build kits. 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