As we start the new year, Congress and the administration took steps to avoid the so-called fiscal cliff by extending certain provisions important to the business community and current tax rates for most Americans, while allowing tax rates to rise on upper-income taxpayers. Specifically, the American Taxpayer Relief Act (H.R. 8) would permanently maintain the reduced 2001 and 2003 tax rates for individuals earning up to $400,000 ($450,000 for married couples), while allowing income above that to be taxed at rates rising to 39.6 percent.
The legislation addresses issues long-supported by NAIOP:
- 15-year qualified leasehold improvement (building has been in service for more than three years)
depreciation extended for two years, retroactively from January 1, 2012, through January 1, 2014;
- New Markets Tax Credits extended;
- Provisions on bonus depreciation extended; and
- Treatment of carried interest as capital gains left unchanged.
While the initial outlook for commercial real estate is positive, substantial concerns remain as the legislation delays scheduled budget cuts for only two months and does little to address the nation's long-term fiscal problems. Comprehensive reform of the nation's tax code now moves to the forefront.
Throughout these discussions, NAIOP is engaged on the advocacy-front to ensure that policy makers understand how proposed changes could affect our industry. Next month, leaders from NAIOP chapters will personally carry our message to Capitol Hill as they convene for our annual Chapter Leadership & Legislative Retreat, where they'll both hear from lawmakers and meet with their elected officials.
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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 18,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.
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