Tax conference close to reconciling key pass-through issues for real estate firms: sources
Final bill could allow more real estate owners to benefit than Senate bill proposed
New York /
The Capitol Building, NYC and Uncle Sam
Members of Congress are inching closer to reconciling key differences for which real estate companies would qualify as pass-throughs for tax cuts, sources close to the talks told The Real Deal.
The original House and Senate tax bills differed in which firms organized through pass-throughs, such as LLCs, would qualify for lower tax rates on certain income. The House version was seen as being more favorable to capital-intensive real estate firms – think small developers or old-money families sitting on lots of multifamily holdings – while the Senate version would exclude many real estate companies with major assets that contract out the majority of their labor and as a consequence have small payrolls .
But the tax conference is debating what one source described as a potential hybrid of the two bills.
While the final bill is likely to favor the Senate language on this issue, the source said, negotiators are looking at options that would allow capital-intensive firms, like many real estate companies are, to qualify for some degree of the pass-through tax cuts.
The House had passed a 25 percent top tax rate for some pass-through income (considered by legislators to be 30 percent of a qualifying company s total income). Real estate investors would[……]
Could tax reform kill the jumbo mortgage market?
New rules could dampen the market for big resi loans
First Republic’s Michael Roffler (Credit: LinkedIn, iStock)
The GOP tax plan could put a squeeze on the market for jumbo mortgages, which banks have been leaning on more heavily since the financial crisis.
Jumbo mortgages are loans that are too big to sell to Fannie Mae and Freddie Mac. In most parts of the country, a jumbo loan is one that is above $424,100. Banks usually keep these loans on their books as wealthy borrowers are less likely to default, and the jumbo-loan market saw its biggest dollar volume last year since 2006, the Wall Street Journal reported.
But parts of the Republican tax plan passed last week that reduce the size of loans eligible for the mortgage-interest deduction and restrictions on property taxes that can be deducted from homeowners’ tax bill could make wealthy buyers think twice about acquiring a second or third home.
“We’re already living in a rate-lock world,” said Ben Graboske of the mortgage data firm Black Knight. “Now you’re going to add this.”
High-cost mortgages make up the majority of the market in areas like New York City, where 84 percent of Manhattan purchase mortgages this year were for more than $500,000, according to ATTOM Data Solutions.
It’s too early to tell how the tax plan will impact the jumbo-mortgage market, but those lenders that focus heavily on the space could see more meaningful consequences.
New Council bill hopes to bring transparency to the housing lottery
HPD would have to release report on applicants
New York /
535 Carlton Avenue in Brooklyn and 855 Sixth Avenue
A new bill seeks to make the lottery for affordable housing units in the city more transparent.
Council member Mark Treyger on Thursday introduced the legislation, which would require the city to release information on how many applications they receive, how many were selected, how many were wait-listed and how many were rejected. The report, which would be released by the Department of Housing Preservation and Development, would also include certain demographic information on the applicants. The information would be organized according to income levels of those candidates — if they make 30 percent of the area median income, between 50 and 80 percent, or between 80 and 165 percent.
We ll finally know exactly who qualifies for affordable housing and, perhaps more importantly, who doesn t and why, Treyger said during a council meeting on Thursday.
The bill could shed some light on demand for apartments in certain income bands. Some developers have expressed difficulty in finding tenants for units set aside for those in the higher AMI ranges (130 to 165 percent). Tenants at this income level often unaware that they are eligible for subsidized housing, or are deterred by the amount of paperwork that goes into snagging such units.
Late last month, Mayor Bill de Blasio announced that he was exp[……]
Why 230,000 affordable housing units may never get built
Under new GOP tax law, low-income housing tax credits have less value
New York /
A rendering of the Peninsula (credit: WXY Architecture + Urban Design)
Even with private activity bonds intact, the new Republican tax law could cut the growth of subsidized affordable housing by more than 230,000 homes in the next 10 years.
The tax plan reduces the tax rate for corporations from 35 to 21 percent, which in turn, lowers the value of low-income housing tax credits, the New York Times reported. The reduction would shave roughly 235,000 homes from new supply of affordable housing across the U.S. over the next decade, according to a report by a national accounting firm, Novogradac Company.
“It’s the greatest shock to the affordable-housing system since the Great Recession,” Michael Novogradac, managing partner of Novogradac, told the Times.
Kate Hartley, director of the San Francisco Mayor’s Office of Housing and Community Development, said the decrease in the corporate tax rate could increase the cost of building affordable housing by $50,000 per unit.
The House version of the tax bill had proposed eliminating private activity bonds, a move New York City officials estimated would decrease the number of affordable units created each year by 10,000. It s not yet clear how the new tax plan will impact the mayor s goal of preserving or creating 300,000 units by 2026. [NYT] — Kathryn Brenzel
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Here’s how the Trump admin’s El Salvador decision might play out in LA’s housing market
Clusters of Salvadorans live in the San Fernando Valley and Central L.A.
Los Angeles /
The El Salvador Community Corridor, along Vermont Avenue in Los Angeles (Photo by Jay L. Clendenin/Los Angeles Times via Getty Images)
The Trump administration’s decision to end a special status for citizens of El Salvador could have a significant impact on L.A.’s housing market, experts said, and could decrease the rent-stabilized stock in certain Salvadoran strongholds.
On Monday, the administration ended the “Temporary Protected Status” (TPS) program for Salvadorans, a move that will force over 200,000 citizens of that country who have been living in the U.S. to leave by September 2019.
That includes roughly 30,000 people living in L.A., according to a 2017 study by the Center for Migration Studies.
President George Bush signed the TPS program into law in 1990, and it was renewed several times by presidents George W. Bush and Barack Obama. In 2016, El Salvador’s poverty, drought and gang violence were cited as reasons to renew the program.
L.A. County alone is home to 263,000 Salvadorans, representing nearly 20.6 percent of the entire Salvadoran population living in the U.S., according to a 2012 2016 Migration Policy Institute study. California is home to over 420,000. (More than 13,000 El Salvadorans reside in Miami-Dade county, while about 114,000 of them reside in New York state.)
Could the Republican tax plan drive wealthy residents out of the Northeast?
Earners making $1M in region could owe IRS extra $21K under proposed GOP plan
New York /
The proposed GOP tax plan could make wealthy Northeasterners consider a move from Manhattan or Greenwich to the sandy beaches of Florida, a few experts believe.
The Republican proposals in the House and Senate would eliminate deductions for the majority of state and local taxes, meaning people with an annual salary of $1 million could end up owing the IRS an extra $21,000, according to Bloomberg.
The plan would impact salary earners much more than investors, with a person making $1 million from investments saving roughly $7,000.
The possible change has fueled talk of moving among wealthier residents of the Northeast, where individual tax rates rank among the highest in the country. Florida has emerged as a prime possible destination for them thanks to its lack of a state income tax.
However, David Silver, a senior manager at the accounting firm MBAF, told Bloomberg he thinks talk of moving is mostly hot air.
“I would argue it’s probably not all that likely to uproot your family, leave your friends, and put your kids in new schools just because of proposed tax changes,” he said.
The GOP tax plan has proven popular so far with the commercial real estate industry, but it is significantly less popular on the residential side, as it could increase the cost of homeownership. [Bloomberg] – Eddie Small
He’s baaaack: Durst appointed to Hudson River Park Trust
Developer notoriously clashed with media mogul Barry Diller over Pier 55
New York /
Douglas Durst, Gale Brewer and Hudson River Park
Manhattan Borough President Gale Brewer named Douglas Durst on Friday to the board of Hudson River Park Trust, the latest twist in the saga over the park that notoriously pitted Durst against media mogul Barry Diller.
Ostensibly, Durst is there to finish the sprawling park, Crain’s reported.
I asked him to join the board—he didn t volunteer or ask me, Brewer said. I think he loves the park.
Durst had been chairman of the trust’s fundraising partner, Friends of Hudson River Park, when it formed in 1999, but he and about half a dozen other board members were pushed out in 2011.
Durst was reportedly sour over his ousting, and when Diller came up with a plan to build a floating park and performance space over the river at Pier 55, the real estate tycoon secretly funded a lawsuit that sought to sink the project.
The lawsuit was, ultimately, unsuccessful. But in September Diller nixed plans for the project, as costs ballooned form the initial projection of $35 million to $250 million.
But a month later, Gov. Andrew Cuomo announced he had brokered a deal to revive the project.
Roughly 25 percent of the park’s green space remains unbuilt, including a concrete pier across from the Durst Organization’s rental building Via 57 West.
Durst said in a statement that he was grateful “to[……]
NY Senate budget offers title insurance companies a lifeline
Line would roll back DFS marketing ban
New York /
From left: James Seward, Kevin Cahill and Maria Vullo
UPDATED, March 14, 6:06 p.m.: The New York State Senate threw title companies a rope in its proposed budget Wednesday.
The Senate s budget for fiscal 2018-19 contains language that would rollback a series of strict anti-marketing regulations enacted last month by the Department of Financial Services. The regulations — which aim to curb excessive spending in an industry known for wining and dining clients — bans title companies from marketing expenses like offering clients meals and entertainment.
In a subsection of the Senate s budget, lawmakers offer a clear definition of an inducement. The budget also states that under state insurance laws, title companies cannot be prevented from undertaking any usual and customary marketing activity aimed at acquainting present and prospective customers with the advantages of using a particular title insurer or title insurance agent.
So far, the Assembly has not included a similar line in its budget. Over the next few weeks, Gov. Andrew Cuomo and members of both Houses will hash out their respective proposals to finalize the final budget.
In January, the state Senate voted to ease the regulations by challenging DFS authority. The Assembly has been exploring options cracking down on bad actors while instituting reform.
Last month, the New York State Land Title As[……]
Cuomo’s Long Island Sound crossing could cost as much as $55 billion
Governor is considering multiple options for long-talked-about connection
New York Weekend Edition /
Gov. Cuomo and Long Island Sound
Gov. Andrew Cuomo’s already called for $100 billion in infrastructure projects, so what’s a few tens of billion dollars more?
The Democratic governor wants to build a bridge or a tunnel crossing Long Island Sound that would connect Suffolk and Nassau counties with Westchester County
The price tag? A recent feasibility study found it could be as high as a whopping $55 billion, the Wall Street Journal reported. That would make it one of the most expensive infrastructure projects in the country.
“In terms of thinking big and projects that can be transformative for the region, this can be one of the biggest,” said Kevin Law, president of the economic and business advocacy group Long Island Association.
At the high end of the study, an 18-mile tunnel from Oyster Bay to Rye could cost between $32 billion and $55 billion, depending on how many lanes of traffic it would carry. A bridge covering the same route could cost roughly $8.5 billion. A bridge or tunnel from Kings Park, N.Y. to Bridgeport, Conn. could cost between $13 billion and $23 billion, the feasibility study found.
Somewhere between 87,000 and 113,000 cars and trucks would travel though a cross-Sound connection each day by 2040, and the tolls could generate up to $556 million annually. [WSJ] – Rich Bockmann[……]
Haters to the left: Charlie Kushner not concerned with investigations
Says probes have had no effect on company’s ability to land financing
New York /
From left: Josh, Charles and Jared Kushner (Credit: Getty Images)
Charles Kushner said federal probes into the family business have not made it harder to find financing for their projects, and he has no concerns about the investigations.
All I know is that we are not at all concerned, and we are cooperating, Kushner told the Washington Post in his first interview since son Jared Kushner went to work at the White House. And they can knock themselves out for the next 10 years reading those papers as far as I m concerned.
Kushner Companies has acknowledged that the U.S. attorney in Brooklyn subpoenaed information on projects seeking EB-5 funding, and that the company handed over documents related to a $285 million Deutsche Bank loan that Jared nailed down for the real estate company one month before Election Day.
Manager Magazin, a well-respected German business publication, recently reported that Deutsche officials identified “suspicious transactions” related to Kushner Companies and reported them to banking regulators. Deutsche put out a statement denying the report, and said it was taking legal action.
Kushner Companies sent a statement to The Real Deal saying the firm has done nothing wrong with its relationship with Deutsche Bank.
The Office of Special Counsel has not contacted us. There is no money launderin[……]