The recently enacted U.S. tax reform is poised to benefit the U.S. multifamily investment market, according to a new report from CBRE that analyzes the implications of tax reform on the multifamily sector in the largest 35 U.S. markets.
“The new tax policy’s raising of the standard deduction, combined with limitations on mortgage interest and state and local tax deductions, will significantly increase the attraction of renting versus buying housing,” said Spencer Levy, CBRE’s Senior Economic Advisor and Head of Research, the Americas. “This could potentially provide a boon to multifamily investors in many markets.”
CBRE’s analysis finds that tax reform, which makes the increased standard deduction of $24,000 for a married couple available to renters as well as homeowners, will significantly benefit renters in most of the country’s largest markets, thereby encouraging renting over homeownership.
Specifically, the report shows the tax benefits of owning a home are now significantly less in 29 of the 35 markets analyzed, up from just 15 markets prior to tax reform. Major markets where the multifamily sector is poised to benefit include Miami, Philadelphia, Chicago, Denver, Seattle and Washington, D.C.
“Overall, tax reform could provide a short-term boost to the U.S. economy by reducing corporate and individual tax rates, encouraging foreign earnings repatriation and incentivizing new capital formation and investment. How much it could stimulate overall economic growth in the long term is uncertain, but specific to the multifamily sector, it’s likely that we will see a boost in the multifamily investment market,” said Mr. Levy.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
