Like it or hate it, the American Taxpayer Relief Act of 2012, also known as the “fiscal cliff fix,” does have some real pluses for commercial real estate investors. Perhaps the most beneficial is the reinstatement of the 15-year recovery period for leasehold improvements. The ability to depreciate tenant improvements on a straight-line basis over 15 years expired in 2011. The new act extends it through 2013 and makes it retroactive to 2012. Other provisions that might help commercial real estate investors and practitioners:
Mortgage debt forgiveness, to a maximum of $2 million, is extended through 2013.
Capital gains remain at 15 percent for single taxpayers earning under $400,000, $450,000 for couples. Make more and you have to pay 20 percent on gains.
The Alternative Minimum Tax exemption amount has been raised to $50,600 for singles and $78,750 for married couples. Plus, the AMT is now indexed to inflation.
The estate tax exemption remained at $5 million and was indexed for inflation.
Expensing of capital equipment (Section 179) is increased to $500 million with a $2 million threshold for both 2012 and 2013.
The 50 percent bonus depreciation is extended through 2013 on new equipment acquired for business use.