Contributed By Hawkins Hatton Corporate Lawyers Ltd
The Tax Cuts and Jobs Bill was signed into law on 22 December 2017. This is intended to bolster real estate development and commercial real estate transactions.
Corporations will see a significant tax saving as the top rate of corporate tax has been reduced from 35% to a flat 21%.
Developers can deduct interest expenses for a variety of real estate activities.
Owners of property can make a large capital gain but defer any tax as long as they use the proceeds to buy some other property. Owners of commercial real estate could flip the properties without ever paying any capital gains tax.
Carried interest will allow for taxation at lower capital gains rates rather than ordinary income rates for assets held for at least three years (as opposed to one year).