Capital Gains
Position
IREM supports and encourages real estate investment by creating a tax system that recognizes inflation and a tax differential in the calculation of capital gains from real estate, while stimulating economic investment and leveling the playing field for those who choose to invest in real estate.
(Adopted: 6/97. Updated: 4/03, 10/08, 9/12, 10/17, 11/22)
Carried Interest
Position
Carried interest is designed to act as an incentive for a general partner to maintain and enhance the value of the real estate so that the operation of the property is a value-add proposition. IREM opposes any proposal that would eliminate capital gains treatment for any carried interest of a real estate partnership.
(Adopted 10/07, updated 10/09, 10/13, 8/15, 11/22)
Depreciation
Position
IREM supports depreciation reform for real estate that secures a significantly shorter cost recovery period without adding complexity or creating artificial acceleration of deductions, such as:
- Upon recognition of capital gain, taxpayers should be able to use sales costs to first reduce the depreciation recapture portion of the gain;
- Suspended losses should also go to reduce depreciation recapture;
- An installment sale as gain is recognized over a period of time, that a percentage of gain from appreciation and depreciation recapture be used in reporting gain;
- A partially tax deferred exchange, gain from appreciation, and depreciation recapture should be reported on an allocated percentage basis.
Finally, IREM supports other proposed regulations that affect the reporting of capital gain by real estate taxpayers to be reported in the most advantageous manner for the taxpayer.
(Adopted: 4/03. Updated: 10/08, 9/12, 10/17, 11/22)
Expensing of Security Equipment
Position
IREM supports the expensing of security equipment in the year it is placed in service. These expenses currently are deducted over a 5-7 year period.
Security improvements benefit all those who work, shop, or visit the property, as well as those in surrounding properties; therefore, they should be fully deductible under the U.S. tax code.
(4/03, confirmed 10/06, updated 3/11, 5/17, 11/22)
Federal Taxation
Position
IREM believes tax revisions or increases enacted by Congress should encourage savings and investment. Further, IREM urges Congress to:
- Support traditional deductions of certain interest expenses and real property taxes, investment interest deductions and deductions for interest and taxes paid during the construction period of a project;
- Strengthen the depreciation and recapture provisions applicable to the sale of real property by supporting provisions which allow existing deductions and depreciation;
- Make permanent rapid amortization provisions for rehabilitation of low-income housing;
- Maintain workable laws providing for the use of tax-exempt mortgage revenue and industrial development bonds while assuring that the program does not unduly compete with or replace the private marketplace;
- Enact provisions which would disallow or adversely limit losses sustained through accounting procedures;
- Enact legislation to allow owners who directly convert buildings to condominiums and cooperatives to qualify for full capital gains tax treatment;
- Maintain a graduated investment tax credit available for old and historic structures; and
- Reject proposals for enactment of a flat tax or other alternative taxation systems that serve as a disincentive for investment in real estate by limiting or repealing traditional real estate-related tax deductions for; mortgage interest, state and local property taxes, depreciation, capital gains, and other operating and business expenses.
(6/86, updated 4/05, 10/09, 4/13, 11/22)
The Federal Budget and Monetary Policy
Position
IREM supports the following policies and provisions:
- The principle and concept of reaching a balanced budget in all political jurisdictions.
- Stimulation of employment, growth of productivity, and inflation control.
- Policies that create savings and capital investment in housing structures, and equipment.
- IREM discourages discriminatory tight money policies.
IREM believes tax increases should be considered only if spending reductions prove insufficient to significantly reduce deficits and such increases must not create disincentives to savings and investment. In the case of a budget surplus, excess funds should be used for tax and/or debt reduction. A program to reduce the national debt must be formulated and implemented. Congress should exercise fiscal discipline by eliminating wasteful and unnecessary spending.
(6/86, updated 4/03, 10/08, 11/22)