BPM Real Estate Insights 7
Of course, complications can arise. For example, when exchanging an apartment complex for another complex, personal property( such as appliances) would no longer be able to be exchanged tax free.
The other area where many private equity businesses dodged a bullet is with the carried interest. This is a performance reward for investment managers for achieving outstanding results. Until the final passage of the TCJA, the continuation of this common arrangement( which taxes the gain at the more favorable capital gains rates) was in doubt, but it managed to survive the final vote.
Of course, no one really knows exactly what the future will hold, as technical corrections and legislative initiatives will ultimately change the final form of the new tax code. By staying on top of the latest developments, property owners— from homeowners to the largest REITs— will have the best chance of getting the best possible outcomes on April 15 and beyond. •
Greg Dresdow is a real estate tax advisor at BPM. To talk about the new tax reforms and how they impact your real estate ventures, contact Greg at gdresdow @ bpmcpa. com or call 925-296-1088.
That’ s good news for many executives / investment managers in the real estate industry. For a real property trade or business, the holding period for the favorable capital gain rates continues to be one year, while in non-real estate businesses, the holding period now is three years to achieve the capital gains tax rates.