The new tax law is a major home run from a financial standpoint for Los Angeles investors with high net worth. As a result, more investment in real estate properties where businesses can take advantage of commercial leases is anticipated in 2018. Investors are expected to benefit from the tax law for a number of reasons, with a tax deduction being one of the biggest ones.
One of these benefits is a 20 percent tax deduction for business income that stems from U.S. pass-through entities. This generally applies to real estate owners who have LLCs or partnerships. It also applies to those who invest in both private and public real estate funds.
Under the United States’ new law, individuals with high net worth who invest in commercial real estate can experience significant savings. In essence, these investors may reduce their investments in real estate to a tax rate of 29.6 percent — 10 points less than the rate back in 2017. The deduction is slated to expire in December of 2025.
With the commercial real estate industry expecting to benefit from the new tax law, an increasing number of investors and would-be investors may begin to take real estate investing more seriously in 2018. Of course, this may lead to more competition among those interested in offering commercial leases that will benefit their bottom lines over the long haul. Just as figuring out the real estate industry can be complicated, understanding the legal aspects of a deal may quickly become overwhelming. Fortunately, an attorney may provide the guidance needed to navigate a potentially lucrative real estate deal in the Los Angeles area.
Source: nreionline.com, “New Tax Laws Likely to Increase HNW Investment in Real Estate“, John Egan, Jan. 24, 2018