A tax bill approaching a vote could be positive for commercial real estate owners in New York. According to the news, the bill would provide corporations with tax cuts, which would help businesses structured as partnerships save. Others who would benefit include pass-through companies and limited liability companies. In real estate, most businesses fit those descriptions.
The new tax proposal would give a 20 percent deduction to any taxable income to businesses like those above if the owners make less than $157,500 yearly. If the business is jointly owned, the two filers must made less than $315,000 to qualify.
The tax bill could help provide incentives for businesses to grow instead of turning to ways to protect their assets. Unfortunately, the bill comes at a cost. Residents would lose the right to deduct the full amount of state or local taxes. That could be bad news for the local economy. Some workers will face higher tax bills, which could impact where employers decide to open. Instead of allocating workers to smaller areas with higher bills, for instance, the employer might choose to open up a new business where profits are higher and bills are lower.
Since commercial real estate companies don't usually have many employees, it's unlikely they'll feel the effects of employees suffering from higher taxes or have to worry about where to place them in satellite locations. As a result, many believe this tax bill is just what the commercial real estate industry needed. Your attorney can tell you more about how any tax changes could affect your business.
Source: The Wall Street Journal, "Tax Bill a Boon to Commercial Real Estate Owners," Keiko Morris, Dec. 17, 2017