By Joshua Burd
For all the buzz and political rhetoric surrounding federal tax reform, Jeff Otteau points to a consequence of one key change that has largely flown under the radar.
For decades, homeowners have been better equipped to reduce their tax bill thanks to deductions such as mortgage interest and property taxes.
Advocates for low- and moderate-income families have long decried this a giveaway to wealthier households, Otteau said, one that was seen as “patently and inherently unfair” to those who couldn’t afford to buy a home.
Tax reform has leveled the playing field — now that the standard deduction has nearly doubled.
“What we have now this year is a complete reversal of that dynamic, where today you’re entitled to get as much or in some cases more of a standard deduction than your homeowner-related itemized deductions would have totaled — whether you’re a homeowner or not,” said Otteau, president of Otteau Valuation Group.
“This is actually progressive … because this is saying, ‘If you’re lower-income and you can’t afford to own a home, we’re going to allow you to take as large a deduction — essentially a double deduction — that in the past was the exclusive domain of property owners with a higher income than you.’ ”
That reversal is likely to enhance the strength of the apartment sector in New Jersey and nationwide. And it’s among a host of changes that will impact commercial real estate — many of them benefits — as a result of the sweeping Tax Cuts and Jobs Act that President Trump signed into law in late December. We spoke to industry experts for a deeper look at the impact of the new tax code, from interest deductions and deep cuts for corporations to new rules for real estate owners and developers.