Thursday, December 07, 2017

Tax Reform Could Impact Affordable Housing




Congress is proposing to gut LIHTC in the house version of the tax reform bill, as illustrated in a recent article (http://bit.ly/lihtcnh) by Kenneth Viscarello, Attorney at Sheehan Phinney, published in the NH Business Review. Attorney Viscarello outlined the proposed impacts in terms relevant to the housing market and means of financing such projects that we face in New Hampshire, and points out a couple of key changes that especially relate to the for-profit developers of affordable housing in this state.

The current code supports a public-private partnership that is essential to providing adequate stock of affordable housing, since the government can’t (and many say shouldn’t) be charged to meet the need, both from an efficiency standpoint and that of practicality.  Without the corporate tax exposure, need to buy these tax credits by the primary purchasers today will be reduced, and, as Attorney Viscarello points out, there are no other offsets to benefit LIHTC.  While not a one-dimensional issue, this impact is important to consider.
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If you are interested in housing development, news relating to the industry, or just want to discuss commercial RE topics, please feel free to reach out to me through my profile, email me, or call my office at 603-668-7000 x216.

Matthew Bacon, MiCP
Commercial Real Estate Advisor

116 South River Road | Bedford NH 03110 | Main +1 (603) 668-7000
Cell +1 (603) 724-4554 | Direct +1 (603) 637-2005


What do Federal Tax Plans Mean for Real Estate?


There’s no indicator that the changes will structurally affect values



There has been much debate over the merits of the U.S. House and Senate tax plans coming out of Washington. For me, this forum is not to judge good or bad, but to give some insight on what the proposals are and what the likely outcomes could be.
In my role as a commercial real estate broker and volunteer for the Commercial Investment Board of Realtors, I visited Washington each of the last six years to discuss real estate issues with our representatives. This gives me a good insight as to which way the leaves are blowing.
First a quick disclaimer and civics lesson: While there has been a push to “get the bill passed before Thanksgiving” and now to “get the bill passed before the end of the year,” we really have no idea when or even if it will pass. If everything passes, the House and Senate will have to reconcile before anything gets sent to the president.  Users and investors should not take this article for investment advice, as it is the equivalent of trying to pick today who will win the 2018 World Series. There is just no way to know. (Except it should be the Boston Red Sox.)
Also, taxation is like a Whac-A-Mole. You may see savings in one area, but expense in another, so seek your tax adviser for a look at the whole picture.
While the focus of this article practice is commercial real estate, many folks have questions on residential real estate. Both plans call for the elimination of deductions on home equity line debt. In addition, the House calls for the amount of interest on debt in excess of $500,000 to be nondeductible (currently the limit is $1 million). It also eliminates outright the deductions on second homes. Also of importance to the state of New Hampshire is that the House and Senate plans cap real estate tax deductions at $10,000.
One key issue that came as a surprise on the commercial real estate front was proposed changes to depreciation. Currently, commercial real estate depreciation schedules are either 39 years or 27.5 years. Don’t ask me why those are the numbers – no one ever accused the tax code of making sense. The proposed change would have a nominal impact on multifamily investment assets, however on the office, industrial and retail front, we will see that you will be able to depreciate 4 percent of your asset’s value each year as opposed to roughly 2.5 percent. That is a considerable shelter which could increase the value on those asset classes.
Realtors have often been concerned about changes to Section 1031, which allows investors to sell an asset and defer taxation so long as they invest back into the economy with another “like kind” asset. Both plans offer no changes to this policy for real property. However there are some subtle changes for personal property that could affect items like equipment and specialty fixtures such as lighting. Best to consult your tax advisor with any questions here.
On the speculative side of the investigation is the Senate’s proposal to combine this tax plan with changes to the Affordable Care Act. While the details of this are not specific, there is a tax on investments that is embedded in the ACA. If a reconciled bill comes before the president, it is not certain at this time if that tax will remain or if it will go. The formula is somewhat complicated, but in short, the tax is 3.8 percent on investment gains above a certain dollar amount, based on earnings. Most folks are not even aware that this exists now, so it is unclear what impact this will have.
There is a saying that you should “never let the tax tail wag the investment dog.” I think the proposed changes are a good example. The changes here can have a major effect on your commercial real estate assets, both as investors and users. Tax reform could affect a small 2,000-square-foot office condo or a 100-unit multifamily investment.  However, at this juncture there is no indicator that a sweeping change (such as the passive income/loss rules in the mid-1980s) will structurally change values. Yes, there will be market fluctuations as a result and some asset classes will win and some will lose, but the macro factors of supply/demand and interest rates will trump these proposed changes (pun intended). Stay the course on your real estate goals. Your needs are likely more important than these tax changes.
Chris Norwood is president of NAI Norwood Group, Bedford.  Greg Bryant of Bedford Cost Segregation and Lynne Bagby of Asset Preservation Inc. both assisted in helping to explain the subject.


http://www.nhbr.com/December-22-2017/What-do-federal-tax-plans-mean-for-real-estate/

Tuesday, August 15, 2017

Investors Buying Office Space in Bedford NH

Bedford NH - NAI Norwood Group is pleased to announce two recent office sales in the Bedford NH market. 10 Chestnut Drive is a 13,690+/-sf two story office building off the busy Route 101 corridor comprised of a number of small, local businesses. According to the registry  of deeds it sold for $790,000. 116 South River Road Building B was a 7500+/-sf two story, steel framed, brick fa├žade condo that sold in the prestigious Coldstream Office Park at 116 South River Road. According to the registry of deeds it sold for $870,000.


“It is clear that these sales are a testament that a Bedford business address continues to be highly desirable.” Noted Louise Norwood, Principal at the firm. “With so much new development in town, along with the low interest rates, the demand remains high.”


“Both of these assets were sold to investors.” Added Chris Norwood, President of the firm, “With an additional sale of a small condo unit earlier in the summer, this marks our third investment product sale in Bedford in the last 60 days. While the owner occupant market is strong, the proof is here that investors are still seeking sound real estate as diversification to their other investments.”


NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 400+ offices and 7,000+ professionals, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Tuesday, August 08, 2017

NAI Norwood Group Sells Land in Kittery for One Million Dollars per Acre

Kittery ME – NAI Norwood Group is pleased to announce the sale of 1.96+/- acres located at 275 US Route 1 in Kittery, Maine. The site was the former home of Maine’s original outlet center. Greg Whalen of NAI Norwood Group represented the seller, KTP Shops LLC, in the transaction. It closed on July 27, 2017 in the amount of $1,960,000.


The site will be the new home of a Hampton Inn and Suites. The 32,000+ retail building currently residing on the site will soon begin the demolition process. This project has been a long time coming. It went under agreement nearly three years ago and has fought a long, hard battle through Maine’s court system. For full details on the site renovation or the court case, please contact Greg Whalen at 603-431-3001 or gwhalen@nainorwoodgroup.com.



NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 45+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.

Wednesday, July 05, 2017

JOSEPH MENDOLA OF NAI NORWOOD GROUP SELLS UPTON SELF STORAGE IN UPTON, MA for $4.6M

UPTON MA - NAI Norwood Group is pleased to announce the sale of Upton Self Storage at 226 Milford Street in Upton, MA. Joseph Mendola, Senior Advisor of NAI Norwood Group represented the seller, Upton Self Storage, LLC, and collaborated with the buyer, a Delaware Limited Liability Company, in this transaction. Mr. Mendola is also the Argus Self Storage Sales Network representative of Northern New England. Upton Self Storage, LLC closed this transaction for $4.6 million.


This self-storage facility is a state of the art facility. It has 43,250 SF of rentable square feet and 287 self-storage units. The facility services the Greater Upton-Milford-Hopkinton marketplace.


NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 400+ offices and 7000+ professionals, NAI Norwood Group is able to leverage their 48+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603) 668-7000 or 28 Deer Street Suite 301, Portsmouth, NH 03801 (603) 431-3001.