Developers and owners in the rental market are seeing the potential benefits of the newly-passed tax bill, including a slightly lower corporate tax rate, and increased demand for rental housing.
The bill allows a portion of income from pass-through entities, like limited liability companies that own many commercial real estate buildings, to take a deduction on their income of up to 20 percent, giving them a top effective rate of 29.6 percent, per Realtor.com. That provision expires after 2025, which could possibly create uncertainty in the industry.
“John Q. Public has been sold by the home-building industry that it’s better to own than rent because you’re getting subsidized by the government because you have all these deductions,” said Ric Campo, chairman and chief executive of Camden Property Trust, a real-estate investment trust that invests in apartments. “That equation will change.” Mr. Campo estimates his typical tenant will pay about $1,500 less a year in taxes.
