By Jeremy Morris, Associate Editor, USDR.
The Real Estate Roundtable and 21 real estate trade groups today sent a joint letter to all U.S. Senators expressing support for fundamental tax reform that creates jobs and promotes economic growth — while preserving real estate’s s role as an engine of economic activity.
The real estate industry employs 17.6 million Americans, contributes one-quarter of all tax revenue, and generates as much as 70 percent of local tax revenue. Additionally, public and private retirement plans, endowments, and foundations hold nearly $250 billion in real estate assets. “Real estate is where America lives, works, shops, plays and invests,” said Roundtable President and CEO Jeffrey D. DeBoer.
“Well-designed tax reform will add momentum to the economic recovery by spurring even more job-creating real estate activity,” DeBoer continued. “For example, tax reform that recognizes and rewards appropriate levels of risk taking will encourage construction and development activities, and will facilitate the successful refinancing of $1.4 trillion in commercial real estate mortgages maturing over the next few years.”
Hit hard by severe job losses, property devaluation, lost equity and a credit contraction during the Great Recession, the real estate sector is now emerging as a principal driver of the U.S. economic recovery. Comprehensive tax reform offers an opportunity to foster long-term job creation and economic growth. At the same time, poorly designed tax reform has the potential to destabilize real estate and undermine the nascent economic recovery.
With potential headwinds in the form of rising interest rates and weak employment, Congress should approach tax reforms related to owning, developing, and financing real estate with caution in order to avoid negative, unintended consequences.
“Tax rules related to interest deductibility, depreciation, capital gains, foreign investment, entity choice, and the federal treatment of state and local taxes, are particularly important to strong, growing real estate markets,” said DeBoer.
Between March and June of this year, The Roundtable submitted five comment letters to the House Ways and Means Committee on various aspects of comprehensive tax reform. [The letters are available at www.rer.org.] Today’s letter to all U.S. Senators is the latest signal that the real estate industry stands ready to work with lawmakers in the weeks and months ahead to ensure that tax reform contributes to strong job growth, environmentally responsible real estate investment and development, and a sustainable, broad-based economic recovery.