On April 23, FEA sent a letter to the National Taxpayers Union regarding the immediate expensing of real property structures.
Immediate expensing of all classes of depreciable property was a major topic during the course of the passage of the Tax Cuts Jobs Act in 2017, spurring many discussions both amongst the House and Senate tax writing committees and taxpayer groups. The TCJA as enacted allowed for the immediate expensing of personal property only, subject to a phase out period. The major real estate business associations and the FEA opposed immediate expensing of residential and commercial real property for a variety of reasons.
It is our view and the view of many in the commercial real estate industry that immediate expensing is not appropriate for long-life assets like real estate but is appropriate for short-life assets like equipment which can and has provided an economic boost without distorting the economy. Like-kind exchanges under existing IRC Section 1031 provide the same economic incentive to reinvest in investment or business-use real property with the same ability to shelter the gain and defer an immediate tax impact, but without the danger of market distortion.