Tax / Finance

In June of 2012, the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued proposals intended to implement new international banking standards, known as the Basel III Capital Accords, promulgated by the Basel Committee on Banking Supervision. Banks utilize the framework established by the Basel Committee to calculate the amount of regulatory capital they must hold against specific types of loans they hold on their books. The proposed Basel III standards could have a significant negative impact on lending by banks to the commercial real estate sector. Several aspects of the proposed rulemakings would have harmful effects on the availability and cost of credit to commercial, multifamily, and single-family residential real estate borrowers and to the U.S. economy as a result.

Learn about Brownfields and Brownfields Remediation Expensing, and its potential to contribute to economic growth

A "carried interest", also known as a "promoted interest" or a "promote" in the real estate industry, is a financial interest in the long-term capital gain of a development given to a general partner (GP), usually the developer, by the limited partners (LPs), the investors in the partnership. Learn about the issue of carried interest taxation and its impact on the commercial real estate industry.

On August 17, 2010, the Financial Accounting Standards Board (FASB), an independent body that establishes accounting standards for the private sector that are recognized by the Securities and Exchange Commission as authoritative, issued an Exposure Draft detailing proposed changes to standards governing how landlords and tenants account for their leases. The proposed changes are intended to increase transparency for investors by, among other things, requiring that the full long-term payments associated with the leases be shown on the balance sheet of the tenant as liabilities. Renewal options and contingent rents would be included when calculating liability under lease agreements. Operating leases would be capitalized and represented as current liabilities.

Learn about the issue of internet sales tax and its possible impact on commercial real estate.

Leasehold improvements, also known as tenant improvements (TI), are the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant. These include changes to walls, floors, ceilings, and lighting, among others. In actual practice, these customized tenant improvements usually have a useful economic life of 5 to 10 years, which spans the average commercial lease term.

Like-Kind Exchange or “1031 exchange” refers to section 1031 of the U.S. Internal Revenue Code. This section of the U.S. Internal Revenue Code provides that capital gain taxes can be deferred in cases of exchanges of determined assets. The reasoning behind this provision is that this transaction is not meant to be profitable and may not represent an increment in assets. These exchanges may only serve business purposes and are identified as a “non-recognition” provision. Learn about NAIOP’s position on the issue of like-kind exchanges.

The New Markets Tax Credit (NMTC) Program aims to foster revitalization efforts in low-income and impoverished communities across the United States. The NMTC Program provides tax credit incentives to investors for equity investments in a certified Community Development Entity whose primary mission is to invest in low-income communities.

Prior to the terrorist attacks of September 11, 2001, insurers did not specifically exclude losses stemming from terrorist attacks on industrial and commercial office buildings. At that time, only “acts of war” were excluded from coverage from most insurance policies. In the aftermath of the attacks, however, and with the subsequent conduct of the United States on the “Global War on Terror” -- the insurance industry testified before Congress that future terrorist acts could be construed as acts of war not eligible for coverage under their insurance policies. Learn about Terrorism Insurance and its impact on the commercial real estate industry.