December 8, 2009
Congress is working on reforming (raising) taxes and one of the areas it is focused in on is carried interests. We discussed this earlier in March.
This would cause real estate partnerships (GPs) to be taxed at ordinary income levels rather than the capital gains rate of 15%. Here’s an email I received from NAIOP spelling out the details and how you can help.
Oppose A Tax Hike On Real Estate Development!
Action Needed to Oppose More Than Doubling of Taxes on Real Estate Carried Interests
On December 7, Congressman Charles Rangel Ways, chairman of the Ways and Means Committee of the House of Representatives, introduced the “Tax Extenders Act of 2009″ (H.R. 4213). Included in the legislation is a proposal that would more than double the taxes on carried interest received by general partners in real estate partnerships. Under this legislation, carried interest would no longer be taxed as capital gains at 15 percent, but as ordinary income at rates as high as almost 35 percent.
At a time of economic distress for the commercial real estate industry, this legislation would more than double the taxes imposed on many real estate entrepreneurs.
H.R. 4123 affects all partnerships, and not just the Wall Street hedge funds whose practices originally gave rise to the proposal. If enacted into law, this proposal could be the largest modification to the taxation of real estate in more than 20 years, since the Tax Reform Act of 1986.
Bypassing the customary legislative process, the bill will not be considered by the House Ways and Means Committee but instead is scheduled to be taken directly to the House floor for a vote on Wednesday, December 9, reducing meaningful opportunities to amend the bill.
If you’re interested in contacting your congressman or congresswoman about this issue, you can use this link provided by NAIOP to help draft a letter.
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- The Next Victim of the Housing Crisis: Privacy of Mortgage Professionals
- Roubini on the Carry Trade