NAREIT president Steven A. Wechsler says cutting the depreciation limits from 39 to 10 years would let property owners better adapt to the needs of their tenants. According to Wechsler, NAREIT's president and CEO, commercial leases now average less than a single decade, not four decades.
"Shortening the cost recovery period to match the actual life span of the improvements makes more sense economically," he says. "Small businesses, in particular, would benefit because they tend to turn over rental space more frequently than large companies."
He says most owners of commercial rental real estate must routinely change or improve rental space to suit tenants' needs. "The point of this legislation to correct a tax law inequity so that office, retail and other space can be readily changed and improved in a manner that satisfies tenants, without penalizing owners," Wechsler says.
Enacting the bill, according to Wechsler, "will enable REITs and publicly traded real estate companies to modernize building interiors so that tenants may occupy more efficient and effective space. And it will allow companies to make those improvements in a more cost-effective manner."
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