What the Federal Stimulus package means for Development

UPDATE

03-27-20 - 2:00 PM

The House of Representatives has passed the $2 Trillion COVID-19 Stimulus Package and has sent it to President Trump for his signature.

NAIOP Corporate has been on the front lines working with legislators from both parties and the administration. For ongoing coverage of this and other federal issues, be sure to bookmark and visit the Corporate website's COVID-19 Resource Center .

For a quick look at the key package details impacting CRE development, and a wealth of other federal issues resources, visit the Corporate Legislative Actions website .

Among the many resources here, you can also see a list of letters from NAIOP and our real estate partner coalitions to policy makers regarding COVID-19.

In addition, here is an initial review of the package by National Real Estate Investor .

As always, we will continue to update you as information becomes available. Thank you for your patience and understanding. Remember, we are here to serve you and your business!

Key CRE/employer related provisions:

Provides a technical correction to the Qualified Improvement Property (QIP) depreciation drafting error from the 2017 Tax Cuts and Jobs Act (TCJA). The error resulted in a 39-year depreciation period for QIP, rather than the 15-year period – eligible for immediate expensing – that was intended. For real estate firms that elect out of business interest deduction limitations, the error results in a 40-year depreciation period for QIP, rather than the intended 20-year period.
Temporarily suspends the TCJA’s loss limitation rules, and allows a business’ Net Operating Loss (NOL) from 2018, 2019, and 2020 to be carried back 5 years. However, REIT income is not eligible for this benefit.
Fixes another TCJA drafting error, related to NOLs, and ensures carryforward and carryback provisions would be effective for NOLs arising in tax years beginning – not ending – after December 31, 2017. (For firms with tax years not aligned with the calendar year, the original language imposed an 80 percent cap on NOL carryforwards for a year before the TCJA was enacted, contrary to the intent of Congressional tax writers.)
Authorizes $350 billion in federally-guaranteed Small Business Administration (SBA) 7(a) loans. Modifies the 7(a) loan program by allowing all or a portion of the loan to be forgiven if the business maintains its payroll; expands the eligibility requirements for loans to include businesses with 500 or fewer employees (or the number of employees per SBA’s size standards, if greater); increases the cap on 7(a) loans, from $2 million to $10 million (and creates a new formula that calculates loan eligibility based on payroll costs incurred); specifies that such loans may be used to cover payroll, mortgage payments, rent, utility costs, and other obligations; waives certain collateral and personal guarantee requirements; allows for the deferment of such loans for at least 6 months; and sets their maximum interest rate at 4 percent.
Excludes from income the cancellation of emergency small business loan debt, which would otherwise be taxable.
Increases the cap on the deductibility of interest expense, from 30 percent of EBITDA for taxable years beginning in 2019 and 2020, to 50 percent.
Allows employers to defer their share of payroll taxes through the end of the 2020 calendar year, with 50 percent of the deferred amount due in 2021, and the remainder in 2022.
Provides an employee retention credit (applied against the employer’s 6.2 percent share of payroll taxes) for businesses ordered by a governmental authority to partially or fully close. The credit covers wages up to $10,000 per employee, per quarter. However, employers who receive a small business interruption loan are not eligible for the credit.
Accelerates the ability of certain companies to recover Alternative Minimum Tax (AMT) credits, to more quickly obtain additional cash flow. The corporate AMT was repealed by the TCJA, but AMT credits were made available as refundable credits over several years.

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