Photo of Revathi Greenwood Greenwood says that tax reform “may have a modest impact on real GDP growth.”

NEW YORK CITY—Its impact on GDP growth is likely to be modest, but the pending tax-reform package that’s likely to come up for vote next week puts commercial real estate in the winner’s circle, says Cushman & Wakefield in a new report. Some sectors stand to gain more than others as specific provisions of the package take effect. The apartment sector, for instance, is expected to benefit from the planned repeal of the state and local tax deduction as homeownership becomes less appealing.

Furthermore, some of the anticipated benefits for CRE will depend on whether the House or Senate language makes it into the final, reconciled bill. Cushman & Wakefield sees the provisions for pass-through structures, which hold 61% of direct investments in US CRE, aligning more closely with the Senate’s version. In other words, expect to see a 23% deduction limited to 50% of W-2 income, rather than the House bill’s 25% rate on passive income using a 70/30 formula.

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