On Dec. 22, 2017, President Donald Trump signed into law H.R.1, commonly referred to as the Tax Cuts and Jobs Act (Tax Act). (Pub. L. No: 115-97). This is the most sweeping change to the U.S. federal income tax laws since 1986. This and future articles will discuss the individual tax and business tax provisions that affect real estate investment and investors in real estate.

Corporate tax rate lowered to 21 percent; corporate alternative minimum tax repealed. The Tax Act changes the corporate tax rate from a graduated scale with a 35 percent maximum rate to a flat 21 percent corporate rate and repeals the corporate alternative minimum tax (AMT), effective for tax years beginning on Jan. 1, 2018. While most real estate businesses are organized as pass-throughs, large corporate real estate operating companies benefit greatly from this provision alone. Unlike many of the provisions of the Tax Act, the rate reduction is permanent.