Engineered Tax Services Participated at the National Multi-Family Housing Council Research Forum

Over 130 million Americans, or more than one-third of all people living in the U.S., reside in multi-family housing. This is housing described as having four units or more of living spaces per building.

The headline takeaway from the topics at the forum is multi-family housing, in all sectors of the country, now mostly mirrors the New York City experience over the past 40 years.

Due to high land costs, restrictive zoning ordinances, and tight labor markets, only the most expensive, highest margin properties, have been constructed in New York City over those years, and this trend is now occurring nationwide.

This seems to be the experience for communities across the country regardless of region. The same dynamic is also at play in single-family housing as no “starter” homes are being developed on a large scale.

What Does This Mean Money-Wise?

This means a great squeeze in taking place in many cities as fewer new units are brought to market, thus increasing rental rates across all spectrums.

More dollars are needed today to reverse this troubling trend. ETS participated to help educate those represented on tax efficiency strategies their clients are using successfully to support more diverse housing needs.

Dr. Mark Eppli of Marquette University reviewed his report “Explaining the Puzzle of High Apartment Returns”, which brought many of these availability issues to bare.

Other topics such as reviving Rust Belt Cities, by John Austin of the University of Michigan Brookings Institute showed how the cities and areas benefiting from new, high tech job growth, were thriving. However, those communities that had lost their anchor employers, were suffering population outflow.

Reports about the Southeast United States told a similar story as to how communities with good growth in high paying jobs, continued to see new construction but mostly with higher-end developments.

The new tax law was discussed and the general theme is this new law will help develop more housing by giving developers better tools by which to expense projects.

Tax Reform and the Multi-Family Housing Council

Tax Reform expert and ETS CEO and Founder, Julio Gonzalez, fought hard during last year’s tax debate to see these much-needed reforms were implemented into law. Already developers are seeing the benefits of these important changes by bringing more dollars and enthusiasm into the multi-family space.

Areas where Mr. Gonzalez stressed changes, such as better depreciation time frames and bonus depreciation, are making a dramatic impact. Most experts at the Forum agreed that the bonus depreciation alone could provide up to 10% of the projects overall costs in real cash tax savings in year one of ownership. More dollars available for development means more jobs and better housing for Americans.

The Gonzalez Family Office is dedicated to a mission of helping to create jobs that are sustainable and well paying. Construction, architecture, engineering, finance, all help fulfill those twin goals. All are the essence of successful real estate projects.

Representing ETS at the Forum was Director of Business Development, Jamie Pope. “This was an important forum as it presented timely, informative insight into the nation’s all-important multi-housing sector. This type of housing shelters over 130 million Americans daily, and as our countries population continues to grow, the need for more quality housing will grow as well. More dollars generated by better tax results means more jobs and better housing for everyone,” said Mr. Pope.

What More Does ETS Bring to the Table?

ETS helps create more investment dollars for developers and building owners by helping investors become more tax efficient. More tax efficiency means fewer taxes paid thus increasing cash flow which leads to more needed housing units.

In addition to new units, ETS core work helps find every available federal, state, and local tax dollar available through real estate investing. The work also helps identify energy savings for structures during new construction or the remodeling of existing housing stock.

The added benefits of immediate expensing during remodels, repairs and maintenance, may save substantial dollars by preventing overpayment of taxes.

Forum attendees were interested in the discussion points made by ETS regarding the new Opportunity Zones, these give favorable capital gains tax treatment to certain types of investments in approved low-income areas.

Opportunity Zone Investments

While investors await more guidance from Treasury, the Opportunity Zones will allow investors to sell investments with current capital gains, receive tax deferral of those gains today, and if held for at least 10 years, take those gains and any gained in the new investment, tax-free.

These Zone investments will be a great alternative to the current section 1031 investments of today. This will mean substantially more dollars available to place in new business or real estate located in the designated areas.

These all mean more development which will provide more jobs and more quality housing across our country.

The benefit of ETS tax strategies were apparent at the Forum as many participants spoke of how they had used the core tax strategies of the companies to enhance their ability to provide housing for Americans.

The Forum also delved into new and better housing for aging Baby Boomers as well as student housing. All areas identified in presentations and workshops as needing solutions. ETS strategies help in these types of housing as well.

To slow the trend of only high-end housing development occurring, all parties will seek strategies and solutions that help diversify the types of housing by price and preference being built. ETS has solutions that work in meeting the needs of all groups. For more information, please call (800) 236-6519.