Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Monday, 24 October 2011

Carried Interests Tax Hike Would Hurt Economy, Real Estate Groups Say

Written by 
Rate this item
(0 votes)

Commercial Real Estate Direct Staff Report

Commercial real estate associations and trade groups are warning the U.S. Congress that a proposal to increase the tax on the carried interests of investment partnerships would dampen investment activity and stifle the already slow economic recovery and hopes of job growth.

"Simply put, increasing the tax on carried interest will hurt entrepreneurship, investment in communities and job creation in commercial real estate at a time when the economy is still struggling under the weight of a 9.1 percent unemployment rate," the 18 groups say in a letter to the co-chairpersons of the federal deficit reduction committees of the U.S. Senate and the House of Representatives.

The groups, which include the CRE Finance Council and the Real Estate Roundtable, added that proponents of the proposed tax increase have incorrectly "spun" the current tax treatment of partnerships as a tax loophole.

The proposed hike, which is part of a jobs bill that President Barack Obama has submitted to Congress, would increase the tax on carried interests to the same rate as that on ordinary income from its current capital-gains rate. The regular income tax rate tops out at 35 percent, while the capital-gains tax rate for long-term investments is 15 percent.

Characterizing the existing treatment of carried interest as a loophole, "couldn't be further from the truth," according to the trade groups. "Carried interest (or promote) has been used as an investment model in commercial real estate for several decades. It is the way to reward the general partner in a real estate business venture for taking on the countless risks and liabilities associated with long-term real estate projects."

Increasing the tax rate "would discourage risk taking and the type of investment in real estate that we now need across the country," the groups further appealed in their letter to the committee co-chairpersons, U.S. Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas.)

The jobs bill was defeated in a Senate vote, but Democrats in that body have vowed to re-introduce parts of the bill to have them approved as law piece by piece, according to news reports from Washington, D.C.

Comments? E-mail John Covaleski or call him at (267) 247-0112, Ext. 208.



CREDirect Logo
Authoritative, timely and unbiased market intelligence trusted by the most active players in the commercial real estate space.

Experience CREDirect for just $25!

Who is buying, Who is selling, Who is raising capital, Where it is being invested, How deals are being financed
  • Every business day we identify investment, lending and trading opportunities.
  • Subscribers have full access to more than 13 years of CMBS data including our CMBS Pricing Matrix, which allows you to keep track of pricing trends for generic CMBS, and our CMBS Databases, with key data points on every domestic CMBS deal issued since 2000.
  • With a searchable archive of more than 90,000 articles going back to 1999 and a property sales database with more than 13,500 tranactions, each valued at more than $10 million, CREDirect is an extremly powerful research tool.
  • User-customized email alerts allow you to choose criteria that you are particularly interested in and receive email alerts when we publish articles that match your interests. Alerts are based on: City, State, Sector, Subject, Company, Valuation or CMBS Deal Name.

Additional Info

  • Syndicate to Realpoint: No
  • Subject: Property Acquisitions (ACQ)
Read 52 times

Data Digest

 

CMBS Deliquency Volume

dqdataFP1

 

CMBS Special Servicing Volume

sschartfp

Top Bookrunners
Private-Label CMBS

1H2014

Investment Bank

#Deal

Bal $mln

Mkt
Shr%

Deutsche Bank

16.0

12,761.50

32.44

JPMorgan

6.10

4,856.29

12.35

Wells Fargo

8.11

4,790.00

12.18

Citigroup

4.33

3,750.65

9.54

Goldman Sachs

4.00

3,722.62

9.46

 

Moody’s/RCA CPPI

cppichartAFP

 

CMBS Pricing Matrix (Legacy AAA Spreads)

AAAspreadsFPa

 

Top Loan Contributors
Domestic, Private-Label CMBS - 1H2014

Lender

Vol $mln

Mkt
Shr%

Deutsche Bank

8,118.01

20.87

JPMorgan

4,486.83

11.53

CCRE

3,064.41

7.88

Citigroup

2,779.70

7.15

Goldman Sachs

2,604.85

6.70

 

 

 

half-page-ad

warehouse-backstage