Congress slipped a provision into the $2.2 trillion stimulus bill that will save wealthy real estate investors billions in taxes. Some lawmakers stand to profit from the legislation meant to weather the impact of the coronavirus pandemic that has killed tens of thousands and left tens of millions out of work.
Members of Congress invest more cash in real estate than any other industry. That’s been the case every year since 2008, the first year OpenSecrets began tracking lawmakers’ personal finances.
Under the bipartisan CARES Act, investors may use depreciation on their real estate properties to shield unlimited profits made in the stock market from taxes. The provision reverses restrictions in the 2017 Republican tax bill that allowed couples to only offset up to $500,000 in capital gains from taxation.
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Under the new law, investors and business owners may get retroactive tax refunds for business losses incurred in 2018, 2019 and 2020. The bill also eliminates a restriction that business losses may only offset 80 percent of taxable income in a given year.
The Joint Committee on Taxation estimated that the tax changes will save taxpayers $135 billion over 10 years, with the vast majority of the benefit going to households making at least $1 million. The CARES Act also allows real estate owners to write off costs of interior improvements in the first year instead of spreading them out over the property’s useful life, which could lead to significant tax savings, The Real Deal reported.
President Donald Trump and his family members could personally benefit from the CARES Act, given their extensive investments in real estate. Members of Congress who helped craft the stimulus bill could also benefit from its tax provisions.
House Speaker Nancy Pelosi (D-Calif.) and her husband Paul, a real estate investor, have millions of dollars invested in several properties. The Pelosis own up to $25 million in Russell Ranch, a lucrative residential real estate project they avoided disclosing for over a decade. They also own up to $25 million in Auberge du Soleil, a luxury Napa Valley resort.
Sen. Steve Daines (R-Mont.) owns several office buildings in Bozeman, Mont., worth up to $5 million each. Sen. Dianne Feinstein (D-Calif.) owns between $25 million and $50 million in Carlton Hotel Properties, which owns the Carlton Hotel in San Francisco. Rep. Vern Buchanan (R-Fla.) owns tens of millions in rental properties. Sen. Mike Braun (R-Ind.) owns tens of millions worth of rural real estate.
The New York Times reported that Senate Republicans pushed to include the tax changes in the stimulus bill with the idea that it would provide needed funds for cash-strapped businesses. Senate Majority Leader Mitch McConnell (R-Ky.) invests most of his millions in index funds and mutual funds. He reported owning one rental property worth up to $5 million.
The CARES Act is already the second most-lobbied bill on record, with over 1,500 clients from every major industry reporting trying to influence the stimulus package. Political donors in the real estate industry gave $133 million to candidates and groups this cycle, including $32 million to super PACs. Some of the most generous political donors, such as Joe Biden backer George Marcus and Trump fundraiser Geoff Palmer, are prolific real estate investors.
Since the coronavirus pandemic shuttered businesses in mid-March, 30 million Americans have filed unemployment claims. With the jobless rate reaching depression-era levels, renters are increasingly struggling to make payments. Nearly 4 million homeowners entered mortgage forbearance plans through April, up from fewer than 150,000 in early March. As Americans battle to keep their residences, private equity firms are licking their chops at the prospect of once-in-a-lifetime deals.
Karl Evers-Hillstrom joined the Center for Responsive Politics as its money-in-politics reporter in October 2018. A native of Brooklyn, New York, Karl graduated from the State University of New York at New Paltz with a bachelor’s degree in 2016. He spent the next two years covering a variety of topics, including city government and politics, as a reporter at The Globe, a regional newspaper in Worthington, Minnesota.
This content was originally published here.