Sponsored Content
No summer slowdown for CRE, but a time to reflect, recharge and reset before a busy fall
While there is a sense of uncertainty in the market due to rising interest rates and the fear of a possible recession on the horizon, we have not seen a slowdown in deal activity; however, for the first time in years, it does appear that clients and others in the industry are taking a minute to breathe to get a better sense of necessary market adjustments. Since the onset of COVID, we have not had a normal summer in that the last two years have been nonstop deal flow year-round. This year, for the first time in a long time, we are seeing clients take a week or two to go on vacation and enjoy time with family. This is completely normal, and quite frankly, much needed.
Interest expense is going up. Your taxes might be too.
The rising interest rates will directly affect real estate businesses operating across all asset classes. The ability to deduct interest expense for tax purposes has helped to alleviate some of the tax burden for business owners. However, the Tax Cuts and Jobs Act of 2017 (“TCJA”) imposed limitations on the deductibility of interest expense for certain taxpayers. For tax years beginning on or after January 1, 2022, some of the adjustments that increased the allowable deduction of interest expense for certain taxpayers have sunset. Accordingly, the sun-setting of these provisions may result in significant increases in taxable income for leveraged businesses subject to these rules. Understanding how the changes to the rules may impact your business now will enable you to properly manage your business’s cash flow and avoid any tax surprises next April.
Reverse appeals can lead to unexpected property tax liabilities for commercial property owners
As the real estate market remains strong, and property values continue to rise across many asset classes, commercial property owners need to be aware of the growing trend with municipalities aggressively seeking to substantially increase tax assessments for commercial properties by filing their own tax appeals.
Preparing for your next DCA inspection — and new emergency contact info requirements
On Nov. 8, 2021, New Jersey enacted N.J.S.A. 55:13A-7.19, setting forth new requirements for landlords of multifamily dwellings. The law was designed to supplement the existing Hotel and Multiple Dwelling Law (N.J.S.A. 55:13A-1 et seq.), which is enforced by the Department of Community Affairs’ (“DCA”) Bureau of Housing Inspection. Under the new law, landlords of multifamily dwellings must provide tenants and prospective tenants with specific information regarding emergency contact instructions and how to contact social services for assistance.
Inflation and the effects on new construction in 2022
As the United States tries to claw its way out of the COVID-19 pandemic, a long-discussed concern in the market has finally started to come to fruition and affect the economy globally. A disrupted supply chain, labor shortages and record government stimulus has begun to drive prices higher leaving nearly all industries uncertain of what the future holds. For the real estate and construction industry, an elevated inflation rate and the setbacks from the pandemic have resulted in what some call a perfect storm that is showing to have a magnified impact on the development costs and timelines of new projects.
