Grant Kaku

Senior Associate

818.212.2686

"

You can never stop learning. "

Danny Abergel

Senior Associate

CA BRE: 01797904

818.212.2715

"

Beware of the little expenses. A small leak can sink a great ship."

Rebekah Zweiban

Senior Research Analyst

818.212.2731

"

Two things define you. Your patience when you have nothing, and your attitude when you have everything."

Ezra Orr

Senior Director, Digital Development

818.212.2730

"

The only person you should try to be better than is the person you were yesterday."

Jesica Ocheltree

Operations Manager

818.212.2730

"

Happiness is a choice, not a result. "

Kathy Magallanes

Certified Agent Support Specialist

"

Success is not in what you have, but who you are."

Individual income tax return form, glasses, pen and calculator on desk

Tax Changes Hike Investor Optimism

The latest investor sentiment survey conducted by Marcus & Millichap highlights the benefits of the law’s new provisions, as well as what it left in place, and the upsides for multiple asset categories.

That the new tax law has increased optimism both about the overall economy and the CRE sector is the overarching theme of the 1st Half 2018 Commercial Real Estate Investment Outlook from Marcus & Millichap. The just-released report highlights how this upbeat investor sentiment bears on CRE in general and on specific product types.

Though many details of the Tax Cuts & Jobs Act have yet to be worked out, “investors have a basic framework of the new rules, which is giving them more confidence in the economy and the performance of commercial real estate,” said John Chang, national director of Research Services at Marcus & Millichap.

Part of this “alleviation of uncertainty,” as Chang termed it, comes from what didn’t happen with the new tax law. For example, some observers had worried, unnecessarily as it turned out, about the possible elimination of 1031 tax-deferred exchanges.

One major tax change that will affect real estate investors is the introduction of a 20 percent deduction on pass-through income. Though the IRS has yet to clarify exactly how this deduction will be applied, investors who hold their real estate investments in a pass-through entity, such as an LLC, could see a sizable benefit.

“This new provision creates an additional lift for commercial real estate investors. It should increase their after-tax yield from these investments, which is very positive,” said William Hughes, senior vice president of Marcus & Millichap Capital Corp.

Fifty-eight percent of the survey respondents expect the new tax law to raise the flow of investment capital into real estate, and 53 percent believe it will result in higher property values.

Share this post

RECENT NEWS & MARKET UPDATES