Key Take Aways from Miami’s February Meeting!
• Carol Surowiec led off the meeting with an in-depth look at Business and Individual Federal Tax updates – where we have been and where we could possibly be heading! She does not anticipate any changes will happen in 2021 but they could (and could be retroactive), however, the longer we get into 2021 the less likely this will happen.
• Carol discussed the huge benefits that business could get from the Employee Retention Credit.
• She then talked about the proposed Biden Tax Plan and its effects on individuals and business. Individuals with income above $400,000 could face a tax rate of 39.6% and should consider accelerating income and deferring deductions where possible. The phase-out of QBI would effectively raise the top ordinary tax rate on flow-through income from 29.6 to 39.6%.
• The Tax plan could eliminate the deferral of gain through like-kind exchanges for ALL property types for taxpayers with AGI more than $400,00 and therefor e real estate investors with low basis property should consider the timing exit from certain properties.
• Carol added a final note on R & D credits, as this is the least utilized credit, but with many changes being made due to the pandemic people should be mindful as this could provide some great opportunities.
• Erin Amon-Surils with CoStar Group is starting to see a real bounce back and strong recovery in the Multi-Family market over the last 6 months. Miami and Ft. Lauderdale were hardest hit and the 1 bedroom asking rent is only slightly below pre-pandemic levels.
• She also said that suburban properties are performing very well, however, she has seen an uptick in urban property in the last 2 months. She is projecting that the suburbs will continue to do well, on the other hand, the office market is a lot harder to forecast. One year into this pandemic and we still do not know what is going to happen with the office market.
• Rob Mitchell with Whiting-Turner says that work has been a bit “choppy” with the new work coming out but has certainly not disappeared by any means. Last week David Simon from Simon Properties said he was bullish on Florida, particularly South Florida, which was meaningful coming from him.
• Parma, lab work, airport work and infrastructure work look good going forward, the only headwind they are feeling right now is on the price escalation on the material side. The increase, in some instances up by 10% makes it tough to gauge jobs. Although it is very hard to find skilled labor, which has been the story for the past 5 or 10 years, wages seem to be holding steady,
• Tom Wood with Thomas D. Wood and Company says he is very busy, and it is a fascinating time to live and own a business in Florida. There is a lot of wealth and service jobs coming to Florida. Material costs are going out of control.
• Rates are moving, up 8 basis points again today we are at 10 years at 128. Great for borrowers still my lowest rate lenders are still putting money out at 2.5 % for 10 years. Banks are still nervous about what is on their balance sheets so not really lending on retail and no one is lending on hospitality.
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