The Forecast on Commercial Regs

May 12, 2016

During the Commercial Legislation and Regulatory Advisory Board meeting at the 2016 REALTORS® Legislative Meetings & Trade Expo on Wednesday, NAR updated members on what to expect from Congress on some of the biggest commercial real estate issues over the coming months. Here are three hot topics to watch, and one big caveat for 2017.

1031 Exchanges

This is the second year in a row that NAR members have had 1031 exchanges on the short list of legislative priorities to talk about with their members of Congress. NAR senior policy representative Evan Liddiard said he didn’t expect anything to happen on this issue in the near future, but he urged commercial practitioners to remain vigilant. “It’s way too early to relax. I still see this as extremely vulnerable in the tax reform effort,” he said.

Crowdfunding

Just this week, the Treasury Department issued a white paper on marketplace lending that seemed to set the stage for increased regulation. NAR’s comments on the issue were incorporated into the report, but association staffers at the board meeting called for even more input from the REALTOR® community. “This is a really new capital area,” said NAR legislative policy representative Erin Stackley. She asked members to think about how crowdfunding might change the way they finance deals or connect investors with new projects, and to add their thoughts to the discussion as Congress considers legislation to clarify or expand on the regulators' actions. “We really have an opportunity to influence it before it gets written in stone,” she said.

Depreciation

Liddiard was optimistic on the issue of real estate depreciation. He said that while Republicans, who control both the House and the Senate, have traditionally favored a balanced budget over new spending, their ideological shift toward economy- and business-boosting initiatives makes them more amenable to allowing businesses to deduct expenses in a more timely fashion. “Republicans generally are backing off from strict deficit neutrality,” he said. “We can't totally take this off the table, but we don’t have to worry as much.”

Post-Election Action

Ken Wingert, a legislative representative for NAR, called for patience in the face of an already recalcitrant Congress. Not only is the normal political stagnation associated with election season in full effect, but the calendar is not on the side of those who are hoping for action on the Hill. He said that between now and the presidential election, there are only 48 days that members of Congress are scheduled to be in town. “That includes the days they fly in and fly out. That doesn’t leave a whole lot of time,” he said. But he did caution REALTORS® to watch for possible action during the lame duck session after the election. “Sometimes that presents opportunities, but sometimes it presents peril. That’s something that keeps people like me up at night.”

—Meg White, REALTOR® Magazine