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California  + Los Angeles  + Net Lease  | 

New Tax Law Possible Boon to CRE in California

Californians – and California commercial real estate firms – are internally processing Senate Bill 113, tax-reform legislation that Gov. Gavin Newsom signed into law on Feb. 9, 2022. Newsom’s office claims $6.1 billion in savings to taxpayer with this new law.

SB 113 includes important California tax law changes, including reinstatement of business tax credits and net operating loss (NOL) deductions once back in 2020 by Assembly Bill 85 (AB 85).

Key takeaways are highlighted here, via Nolan Shutler, Tax Director, MGO LLP:

  • SB 113 should not affect the ability to claim federal tax credits.
  • With AB 85 sunsetting a year early, taxpayers can now claim all available California credits on their 2022 tax returns.

Some other limitations once provided under AB 35 that are no longer include, again from Shutler and MGO:

  • Preservation of Historic Properties Credit (20% of the qualified rehabilitation expenditures with respect to certified historic structures, increased to 25% under certain conditions – e.g., project involves low income housing, federal surplus land, etc.)
  • Credits for donations of food and agricultural transportation of food to food banks.
  • Cal Competes (S corporations claim 1/3rd of the credit on the entity return, and pass through remaining credit amounts)
  • Low Income Housing credit (generally conforms to the federal credit)

More on California’s SB 113 will appear in upcoming posts on ConnectCRE.com

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Inside The Story

MGO, LLP

About Jason Middleton

  • ◦Policy/Gov't
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