Open AccessThe Impact Of The Tax Reform Act On Rental Properties
Author(s) -
Reuben Neumann,
Ronald A. Milne
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.149
H-Index - 22
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v5i2.6355
Subject(s) - tax reform , tax credit , economic rent , ad valorem tax , tax reform act , indirect tax , business , value added tax , direct tax , renting , cash flow , tax avoidance , monetary economics , public economics , economics , finance , state income tax , microeconomics , gross income , law , political science
The Tax Reform Act of 1986 reduces the tax benefits of investments in rental properties. To compensate for the loss of these tax benefits the investor must either accept a lower after tax cash flow or the rents must be raised. This article suggests that a rent increase of 28% may be necessary in order for the investor to maintain the same after tax cash flow as before the tax law changes.