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Commercial Real Estate

What Commercial Real Estate Investors Can Expect From the Biden Administration

President-elect Joe Biden has not released a comprehensive plan for commercial real estate. However, his other proposals do contain relevant provisions for the industry.


Responding to the COVID-19 pandemic will likely be a political driving force for President-elect Joe Biden when he enters office. 

He has laid out detailed plans for addressing the health and economic impacts of the virus, among other priorities. Biden hasn’t released any specific plans for commercial real estate (CRE) yet, but some of his proposals contain relevant provisions for the space and can give an idea of the potential industry impacts, explained Emily Piech, a senior government relations associate for JPMorgan Chase. Piech described what some of new administration's CRE-related priorities may be.  

 

Potential Changes for Commercial Real Estate

According to Piech, Biden may fund some of his plans by eliminating 1031 like-kind exchanges for investors with an overall annual income of more than $400,000. A 1031 exchange allows you to defer capital gains tax, thus freeing more capital for investment in the replacement property.

The new administration may also make changes to opportunity zones. Changes may include requiring investors to provide detailed reporting or public disclosures on the impact of opportunity zone investments. The administration’s Treasury Department may also put stricter requirements around the definition of an opportunity zone. These changes would not require congressional approval.

Other policies that could impact the commercial real estate market may include:

  • Making the first-time homebuyer tax credit permanent or creating a down payment tax credit
  • Expanding Section 8 housing tax credits
  • Establishing an affordable housing fund

 

Raising Revenue and Increasing Oversight

Many of the new administration’s plans would require revenue to be raised, which presents the risk of tax increases. This could include increasing corporate and income taxes on the highest earners. State and local governments may also seek to increase taxes to offset budget pressures.

Piech also expects the new administration to increase oversight of financial institutions, more strictly enforcing current regulations and targeting bad actors, especially those involved in COVID-19 scams.

The new administration is expected to quickly appoint new leadership to the Securities and Exchange Commission, Commodity Futures Trading Commission and Consumer Financial Protection Bureau, so those agencies will likely be the first to change their regulatory approach.

There is also potential for policies that could impact the biggest banks, such as increased capital requirements, additional disclosure requirements or even a bank tax on the largest firms. 

 

© 2020 JPMorgan Chase & Co. All rights reserved. Chase, JPMorgan and JPMorgan Chase are marketing names for certain businesses of JPMorgan Chase & Co. and its subsidiaries worldwide (collectively, “JPMC”). The material contained herein is intended as a general market commentary. To the extent indices have been used in this commentary, please note that it is not possible to invest directly in an index. Opinions expressed herein are those of Emily Piech (Senior Government Relations Associate) and may differ from those of other J.P. Morgan employees and affiliates. This information in no way constitutes J.P. Morgan research and should not be treated as such. Further, the views expressed herein may differ from that contained in J.P. Morgan research reports. The above summary/prices/quotes/statistics have been obtained from sources deemed to be reliable, but we do not guarantee their accuracy or completeness.

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