CARW Leaders joined 8,000 other members in Washington DC for the National Association of REALTORs mid-year legislative conference. Teamed up with the legislative team of the Wisconsin REALTORS® Association, they visited with legislators on important real estate and commercial-specific issues including the proposed modifications of 1031 Exchanges, and depreciation of leasehold improvements in commercial properties. Though comprehensive tax reform is not likely to be enacted in 2015, key Members of Congress are still exploring the possibility of agreement on business-only tax reform with the Obama Administration. Lawmakers and their staffs must be educated about the vital role that commercial real estate tax provisions play in the nation’s economy. Congress should oppose proposals that would repeal like-kind exchanges or extend depreciable lives of real estate.
Specific to our issues, we discussed:
* Like-Kind Exchanges: Since 1921, the Section 1031 provision has allowed investment real estate to be exchanged for property of a like-kind on a tax-deferred basis. Exchanges are essential in investment and commercial real estate transactions; if repealed, fewer redevelopment projects will go forward, resulting in fewer new jobs. The like-kind exchange provision provides liquidity to an illiquid asset. Repealing it would harm economic growth.
* Leasehold Improvements: A temporary provision permitting the cost of leasehold improvements to be recovered over 15 years has been in place for many years. Unfortunately, this provision expired at the end of 2014. Unless Congress extends the provision on a retroactive basis, all the costs of leasehold improvements placed in service on or after January 1, 2015, will need to be recovered over a 39-year period. This will make such investments less attractive and harm economic growth.
Leaders also attended presentations by NAR economist Lawrence Yun, and Sam Chandan PhD of Wharton School of the University of Pennsylvania. Speakers discussed trends in Commercial Real Estate and focused on CRE debt markets research focusing on data, trends and risk analysis. See the presentation HERE.
Other commercial programs included sessions on the latest technology resources, professional standards changes, RPAC, and specific legislative issues that NAR is addressing on behalf of our industry.
We joined our WRA colleagues on legislator visits. The legislators were familiar with and receptive to our issues as a result of ongoing conversations and the strong working relationship we have developed with our elected representatives on all of our real estate issues. Visits included: Senator Johnson, Senator Baldwin, Congressman Kind, Congressman Ryan, Congressman Duffy, Congressman Pocan, Congresswoman Moore, Congressman Ribble, Congressman Sensenbrenner and Congressman Grothman. See pictures HERE.