Information provided by Chris Shaheen, Development Specialist for Saurage Commercial Real Estate
The House of Representatives appears set next week to vote on a tax measure that could hurt the commercial real estate industry just as it is trying to emerge from the worst recession for decades. Lawmakers are looking to change the way limited partnerships and limited liability companies are taxed.
Specifically, legislators want to reclassify “carried interest,” which is currently treated as capital gains and taxed at 15 percent. Instead, carried interest would be considered ordinary income, subjecting it to a top tax rate of 35 percent, plus the 2.9 percent Medicare tax. This is likely to rise to 39.6 percent next year. Furthermore, the 3.8 percent Medicare tax included as a last minute addition to the health care will be added on top in 2013.. Limited partnerships and liability companies are so common in real estate that the impact would be wide, observers say.
Carried interest — sometimes referred to as “the carry” — refers to the share of profits general partners of such institutions receive as compensation. Typically, general partners also take management, construction or leasing fees, though that is already classified as ordinary income. To read this article in its entirety click HEREChris Shaheen is a graduate of Louisiana State University where he obtained a Bachelor of Science in Business Management. Shaheen obtained the Louisiana Real Estate Sales License in 1995 where he began work as a consultant with Saurage Company Inc. as a specialist in development, land valuation, and financing.
Saurage Company, Inc dba Saurage Commercial Real Estate was founded in Baton Rouge in 1991 with the purpose of providing exceptional real estate services with an emphasis on commercial property and property management. Saurage Commercial Real Estate offers to its clients a full range of real estate services including brokerage, investment advising, development consulting, REO disposition specialists, asset management, fee based consulting, tenant representation, and buyer representation. The staff of professionals includes combined experience of 50 years, as well as CCIM Designees and Candidates and recipients of Master of Business Administration.
