Surfing the Web • Chapter 5 1

Chapter 5: FORMS OF REAL PROPERTY OWNERSHIP

Surfing the Web

Go to and read about the New

York State Green Building tax credit.

  1. What types of building are eligible for the tax credit?
  1. How many types of credit components are there?
  1. What are the types?

Go to and read about the “Job and Growth” Tax Relief package.

  1. What does the package do to the maximum individual tax rate for capital gains?
  1. What would the year 2009 see in this area, if no Congressional action were taken to extend the rate cuts?
  1. What would the 15 percent tax rate apply to?

See next page for answers

Answers

  1. What types of building are eligible for the tax credit?

Certain hotels and office buildings having at least 20,000 square feet of interior space; residential multi-family buildings having at least 12 units having at least 20,000 square feet of interior space; residential multi-family buildings, at least two units, part of single or phased construction, with at least 20,000 square feet of interior space, provided at least 10,000 square feet is under construction or rehabilitation in any single phase; and any combination of above.

  1. How many types of credit components are there?

There are six different credit components for which the taxpayer might be allowed a credit. Each credit component has its own requirements, formula for calculating the amount of the credit, and cap. A taxpayer might be allowed one or more of these components, with certain restrictions.

  1. What are the types?

Whole Building Credit Component (owner or tenant); Base Building Credit Component (owner); Tenant Space Credit Component (owner or tenant); Fuel Cell Credit Component; Photovoltaic Module Credit Component; and Green Refrigerant Credit Component.

  1. What does the package do to the maximum individual tax rate for capital gains and dividends?

It reduces the maximum individual tax rate for capital gains generally from 20 percent to 15 percent (from May 6, 2003 through 2008), and for dividends generally from 38.6 percent to 15 percent (from 2003 through 2008).

  1. What would the year 2009 see in this area, if no Congressional action were taken to extend the rate cuts?

The maximum tax rate on capital gains would return to 20 percent in 2009, and the maximum rate on dividends and ordinary income would move to 35 percent in 2009.

  1. What would the 15 percent tax rate apply to?

Capital gains on the sale of REIT stock; REIT capital gains distributions (except to the extent of real estate depreciation recapture, which continues to be taxed at 25%); REIT dividends attributable to dividends received by the REIT from non-REIT corporations, such as taxable REIT subsidiaries; and REIT dividends to the extent attributable to income that was subject to tax by the REIT at the corporate level (e.g., “built-in gains” or when a REIT distributes less than 100% of its taxable income).

Larsen • Real Estate Principles and Practices