Last Minute Change To Tax Bill Could Benefit Real Estate Moguls
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A last minute provision added to the Republican's tax reform bill during reconciliation would provide real estate moguls with a significant tax break.
Under the new provision, the GOP tax bill would include a 20%deduction for income-producing "pass-through" entities including real estate structures like LLCs and S-Corporations.
The Senate bill previously safeguarded this deduction for businesses that paid significant wages to employees, but the new bill provides a way around the safeguard, according to International Business Times.
This money is referred to as "pass-through" because it passes through the private entity that owns an asset to the investors who control it, and has typically been subject to each investor's personal tax rate.
Sen. Bob Corker, a Republican who earned enough as a real estate investor to rank as the Senate's fourth wealthiest member, originally voted against the Senate version of the tax reform bill, but changed his vote after reconciliation. Sen. John Cornyn, the Republican from Texas who serves as majority whip, told ABC’s George Stephanopoulos that the tax cut, which would also result in a multimillion-dollar return for President Donald Trump, was part of an effort to secure enough votes for the legislation to pass.
Corker denied knowledge of the provision on Sunday, saying he had not read the the new tax bill despite changing his vote.
The original bill was said to provide a large tax cut for middle-income families, in addition to stimulating economic growth. Trump had also claimed the overhaul would cost him financially, but the latest reform has been called a “windfall” for developers such as Trump, as well as a number of GOP lawmakers who own depreciable property assets such as rent-generating apartments and office buildings, Vox reports.
The House is expected to vote on the bill on Tuesday. It is expected to land on the desk of the President later this week.