Richmond March 2021 – Key Take Aways
- Guest speakers. Deb Walker and Ron Wainwright with Cherry Bekaert, shared the following Presentation: “Biden’s Tax Plan and it’s Effects on Commercial Real Estate and Employer Retention Credit”.
- The Employee Retention Credit or “ERC” is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. The rules have changed in 2021 from 50% of qualified wages (maximum $10,000 per employee per year) to 70% of qualified wages (still maximum of $10,000 per employee per quarter).
- The maximum credit in 2020 was $5,000 per employee but now in 2021 the maximum credit is $28,000 per employee, an increase of $23,000.
- Tax Rates (probable increase in ordinary rates) – from 37% to 39.6%; and the highest bracket begins at $400,000. Also, probable increase in corporate tax rates from 21% to 28%.
- Residential Property – proposal of $15,000 first time homebuyer credit; proposal of $5B low-income renter’s credit, which would limit rent to 30% of income for qualifying taxpayers and qualifying taxpayer is one who earns too much to qualify for Section 8. Also, a proposal of increased depreciable life for multi-family properties who opt out of interest expense limitations.
- Mike Cobb with CoStar reported that with the release of the Bureau of Labor Statistics report in March, Richmond saw a downward revision from 70% to about 58% recoup of jobs. Richmond’s economy has a 41% recovery rate from April 2020.
- PPP is still a big topic according to Caroline Estill with First Citizens Bank, as they are closing their portal at the end of the month for the 2nd round. With that said, there has been a ‘mad dash’ of people submitting their applications, 500 have been submitted over the last 2 days. Seeing quicker turnaround time on forgiveness of PPP loans. Rates are continuing to go up, but, still at historically low. Seeing a ton of acquisition in the medical and dental space.
- Andy Little with John B. Levy & Company has seen the 10-year treasury yield explode over the past 3 months. The 10 year now is about 160 but went as high at 175. Fannie and Freddie introduced a Sponsor Initiated Affordability Incentives for Multi-Family borrowers. The incentives will be offered in lowering borrower’s costs, for those who preserve or create a minimum of 20% of units as affordable to those earning less than 80% of area median income.
- Charlie Kreye with Draper Aden Associates says the only delay he is seeing in construction is weather! The demand for green energy is driving a lot of opportunity in solar and wind. Industrial is still surging with a massive need for warehouse space. To his surprise, he is seeing a couple of hotel ideas kicking around. Also, starting to see some public sector clients in anticipation of taking advantage of infrastructure money that may be coming available.
Recent Comments