For commercial real estate professionals, the biggest concern over the fiscal cliff is the looming spike in the capital gains tax, said Asieh Mansour, head of research for the Americas division at CBRE in San Francisco, as reported by Phoenix Business Journal.
That’s essentially a tax on profits made from the sale of certain assets such as stocks, bonds and, of course, property. Currently, capital gains are typically taxed at 15 percent, but the rate is set to jump to 20 percent by Jan. 1.
“If it does go into effect, it will lower the capital flows to real estate as an investment target and smaller capital flows will definitely impact valuations because it’s going to drive up cap rates,” Mansour said.
Mansour, however, said next year’s implementation of the Affordable Care Act could be positive for commercial real estate because more people will be insured, health care providers will be increasing their footprints, “and this is going to result in more development of medical and health care-related real estate.”
As for the residential market, the fiscal cliff includes several tax breaks with looming expiration dates next year that many fear will cause the recovering housing sector to relapse, according to a recent article by TheStreet.com.
The Mortgage Forgiveness Debt Relief Act is set to lapse next year.
Robert Nagle, managing partner of Nagle Law Group in Phoenix, has told Phoenix Business Journal the act should be extended because it has helped hundreds of struggling Arizona homeowners.
