Lawmakers scrambling to lock up Republican support for the tax reform bill added a complicated provision late in the process -- one that would provide a multimillion-dollar windfall to real estate investors such as President Donald Trump.
The change, which would allow real estate businesses to take advantage of a new tax break that’s planned for partnerships, limited liability companies and other so-called “pass-through” businesses, combined elements of House and Senate legislation in a new way. Its beneficiaries are clear, tax experts say, and they include a president who’s said that the tax legislation wouldn’t help him financially.
“This last-minute provision will significantly benefit the ultra-wealthy real estate investor, including the president and lawmakers on both sides of the aisle, resulting in a timely tax-reduction gift for the holidays,” said Harvey Bezozi, a certified public accountant and the founder of YourFinancialWizard.com. “Ordinary people who invest in rental real estate will also benefit.”
James Repetti, a tax law professor at Boston College Law School, said: “This is a windfall for real estate developers like Trump.”
The revision might also bring tax benefits to several members of Congress, according to financial disclosures they’ve filed that reflect ownership of pass-through firms with real estate holdings. One such lawmaker, Republican Senator Bob Corker of Tennessee, who’d voted against an earlier version of the legislation, said on Friday that he would support the revised legislation.
Corker said in an interview on Saturday that his change of heart had nothing to do with the added benefit for real estate investors. On Sunday he wrote to Senate Finance Committee Chairman Orrin Hatch seeking an explanation for how the provision came to be included in the final bill after being asked about it by a reporter.
‘President’s Goal’
“The suggestion was that it was airdropped into the conference without prior consideration by either the House or the Senate,” Corker said, adding that he’d been informed over the weekend that a similar provision had been in the House version.
Last month, during a speech in St. Charles, Missouri, Trump took pains to tell his audience that the tax-overhaul bill would hurt him personally. “This is going to cost me a fortune, this thing,” he said. “Believe me.”
On Sunday, White House Deputy Press Secretary Lindsay Walters didn’t directly address questions about how the added provision would affect Trump or his son-in-law and adviser Jared Kushner, whose family business also has extensive real estate holdings.