The Community Recovery and Enhancement (CRE) Act was introduced in the US House of Representatives this week. H.R. 1147, sponsored by Congressman Devin Nunes (R-CA) and Congresswoman Shelley Berkley (D-NV) will help incentivize equity investment in distressed commercial real estate assets and address the pending crisis threatening community banks that currently hold significant real estate debt on their books.
H.R. 1147 is a targeted solution to the current credit crisis impacting commercial real estate. This legislation will enable banks to convert troubled loans into performing assets through modest tax incentives to attract new equity capital to existing commercial real estate projects. Under this temporary tax incentive proposal, qualifying investments must be made before 2013, and the proposal only applies to assets purchased before 2009, i.e. existing projects. At least 80 percent of the newly invested project capital must be used to reduce the outstanding balance of debt on the asset, with the balance going toward capital improvements, such as energy efficiency enhancements or leasehold improvements to attract new tenants. The new investment would qualify for a one-time 50 percent bonus depreciation with a cap of $10 million per eligible property. Additionally, investors would be able to deduct any losses associated with the qualifying investment without regard to the passive loss limitations under Section 469 of the IRS Code.
Here is a news story announcing ICSC support of the measure.
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