In presidential election years, commercial real estate activities often come to a halt as buyers and sellers wait for results and potential policy changes. According to Deloitte’s recent report, there may still be uncertainty surrounding the Trump administration’s tax policies.
These potential changes ranked fifth on Deloitte’s list of “Top Financial Risks to U.S. Commercial Real Estate Firms According to Industry Respondents” for 2025, following concerns about interest rates, cost of capital, cyber risk and regional political instability.
Tim Coy from the Deloitte Center for Financial Services explained that while tax policy has been a concern in previous years among North American respondents in their 2023 outlook survey, it was not at the forefront until now due to other pressing issues such as workforce management or supply chain disruptions.
However, with some provisions of the Tax Cuts and Jobs Act expiring in 2025 along with discussions about renewing certain aspects potentially impacting the industry greatly (such as corporate tax rates), CRE leaders are paying more attention this year. Additionally,the implementation of Pillar Two – a global minimum tax – could also affect multinational headquarters based in America.
The outcomes of international elections could also have long-term implications on fiscal policies according to the report. Furthermore,the expiration date approaching for key pieces within US tax code means that major legislation is likely going through Congress this year which includes sustainability credits/incentives enacted by partaking Inflation Reduction Act back during 2022 along with whether or not Opportunity Zone program will be extended past its current deadline at end-of-year-December-31st-26th .
To prepare accordingly,Coy suggests staying informed about Capitol Hill developments,and planning proactively so there aren’t any costly surprises down-the-road . He adds that it would be wise for CRE leaders take action now before things get too hectic towards end-of-year when TCJA expires; preparing ahead allows them time adapt without scrambling last minute.
In conclusion, the Deloitte report advises CRE leaders to focus on long-term growth and stay updated on potential changes in tax policies. It is important to plan ahead and be prepared for any scenario that may arise from the expiration of TCJA. By taking proactive steps now, there will be less stress and confusion when it comes time for these changes to take effect.
