Biden's Rent Cap Plan
Just reading through Biden's rent cap plan (not yet passed; subject to congressional approval). Looks like tax credits would be withdrawn from any landlords raising rents more than 5% per year with exceptions for new builds or significant renovations. Thoughts on how this would affect the industry?
Edit: I should add, looks like a senior official is saying it would only be effective for 2 years, to serve as a bridge while more supply hits the market.
This 'plan' is just election year fodder to try to win some votes. Biden has zero political capital / good will at this point. He's effectively a lame duck president and no one who wants to win an election in November will get behind anything he says/does. Now maybe the plan can be implemented via executive order but (A) there's a public comment period that will stretch to the election; (B) DJT will spike the rule immediately taking office and (C) industry lawsuits will delay it so long as to never be implemented.
Recall that democrats controlled the White House, senate and house in 2021/2022 and still couldn't kill the 1031 tax deferred exchange.
How is that relevant?
And obviously it's an election year giveaway and won't make it into law.
It is relevant because the administration failed to push through anti-landlord/anti-RE legislation (ie killing 1031) even when it controlled both houses of congress. Now that it only controls one house of congress, it's even less likely to successfully enact anti-landlord/anti-RE legislation.
I thought the relevance/connection between the two things would be obvious to readers, but I was wrong. I'm sorry. Glad I could clear this up for you.
The cynic in me thinks it's dead on arrival. Doubt it gets the votes.
I'm generally not a fan of heavy handed measures like rent caps, rent control, etc. though to solve the housing affordability problem when the real solution is to build more housing. We need massive reform of local governments & zoning laws to break up the little planning board fiefdoms who bow down to 80 year old NIMBY activists across the country.
might pass the sniff test, if there is federal tax credits being applied to these properties. Then the Federal government should(?) have oversight.
You should start a poetry CRE book. Beautifully written.
the only way to
solve the housing crisis is
to build more housing
this applies to tax credit deals only right? Where rents are set based on AMI thresholds? So the impact would only be in markets where AMI grows has grown faster than 5%?
No idea how they are defining the federal tax benefit thing and none of the articles I've read specify.
I saw that if landlords increase rent by more than 5%, they will not be able to take any write-off for depreciation. This has nothing to do with tax credit deals. Only applies to landlords with more than 50 units, and will not impact new construction or "heavy renovations", and would theoretically last for two years. This will not get passed before the election, so the odds are very low this is real.
NMHC where u at cuz. Dont be sleeping on all my donation dollars and get to work homie.
Ah yes, the IRS will track my rent rolls to ensure I don’t increase rents more than 5%. They have proven to be highly capable in the past, this should be no problem. What a brilliant plan!
If this gets passed, it is not the IRS you should be worried about. Your tenants will be the ones making the noise about above market 'illegal' renewal rates.
why would anyone want to kill the 1031?
This is impossible to implement so it is a complete non-starter.
THIS TIME IT WILL WORK DAMN IT
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