Bill Overview
Title: Renewing Investment in American Workers and Supply Chains Act
Description: This bill classifies nonresidential real property and residential rental property as 20-year property for depreciation purposes.
Sponsors: Rep. Walorski, Jackie [R-IN-2]
Target Audience
Population: Individuals involved in real estate investment and rental properties
Estimated Size: 5000000
- The bill relates to the classification of certain types of property for depreciation purposes.
- This affects owners of nonresidential real property and residential rental property as they will be able to depreciate the value of these properties over a different time period.
- Owners of these properties are largely real estate investors, property management companies, and landlords.
- The change in depreciation can potentially alter the financial dynamics for these stakeholders, affecting their tax liabilities and cash flow thereby influencing their investment decisions.
- Globally, many people may own such properties, but this legislation specifically applies to those affected by US tax law, hence the focus is on individuals within the US jurisdiction.
Reasoning
- The Renewing Investment in American Workers and Supply Chains Act primarily affects individuals who own nonresidential real property and residential rental property by changing how these properties are depreciated for tax purposes.
- The policy impacts a significant population segment in the U.S., primarily real estate investors and property management companies, providing them with more advantageous depreciation periods which could enhance cash flow and reduce taxable income.
- The budget for the policy is $28 billion in the first year, scaling to $301 billion over ten years, implying it will support a substantial number of properties and owners across the country.
- The direct effect of the policy will vary depending on the level of property ownership and investment each individual has, with larger benefits accruing to those with significant holdings in affected properties.
Simulated Interviews
Real Estate Investor (San Francisco, CA)
Age: 52 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 5/20
Statement of Opinion:
- As a property investor, the new depreciation rules can free up cash for further investment.
- It might enhance the liquidity of my portfolio over the long term.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 7 |
| Year 20 | 9 | 7 |
Property Manager (Austin, TX)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy facilitates better financial management and could lead to improved property maintenance budgets.
- It allows us to plan long-term investments with clearer expectations of cash flow.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 6 |
Landlord (Seattle, WA)
Age: 63 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 9/20
Statement of Opinion:
- Changing the depreciation schedule helps in reducing immediate tax loads, but I'm concerned about long-term impacts on property value assessments.
- It gives some breathing room financially, but changes need careful strategic planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Commercial Real Estate Developer (Chicago, IL)
Age: 45 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 4/20
Statement of Opinion:
- The depreciation changes could fuel greater investment in new projects by improving cash flow dynamics.
- Initially uncertain, it's now clear this policy can be leveraged for strategic advantage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 9 | 6 |
Renter (Denver, CO)
Age: 29 | Gender: other
Wellbeing Before Policy: 4
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- As a renter, I don't see immediate effects, but this could indirectly influence rent costs.
- Hopefully, it stabilizes or decreases rent over time by reducing landlord tax burdens.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 4 |
| Year 2 | 4 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Accountant for Real Estate Firms (New York, NY)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- From an accounting perspective, these changes mean new ways to optimize client tax situations.
- Adapting to the new policy might initially be challenging but beneficial in the long run.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Small Business Owner (Atlanta, GA)
Age: 50 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This policy allows small business owners like myself to improve cash reserves, helping to potentially expand or refurbish shops.
- It feels like a forward step to assist small businesses in managing properties.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Retired (Phoenix, AZ)
Age: 60 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- Part of my retirement plan involves sustaining property income; eased depreciation means I can adjust maintenance and re-invest schedules.
- It's a helpful policy, though the immediate benefit might be modest due to limited owned property.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Real Estate Agent (Miami, FL)
Age: 38 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- The policy creates new dynamics in property investment, offering potentially better deals to investors.
- It might slightly complicate the current understanding among newcomers to real estate investment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
IT Consultant (Dallas, TX)
Age: 31 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 15.0 years
Commonness: 9/20
Statement of Opinion:
- As a newcomer to property ownership, I'm curious how these changes will play out in practical terms.
- It's enticing to imagine future expansions with these financial benefits in mind.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Cost Estimates
Year 1: $28000000000 (Low: $25000000000, High: $31000000000)
Year 2: $28500000000 (Low: $25500000000, High: $31500000000)
Year 3: $29000000000 (Low: $26000000000, High: $32000000000)
Year 5: $30000000000 (Low: $27000000000, High: $33000000000)
Year 10: $32000000000 (Low: $29000000000, High: $35000000000)
Year 100: $35000000000 (Low: $32000000000, High: $38000000000)
Key Considerations
- The policy will significantly affect federal tax revenues in the short to medium term due to accelerated depreciation.
- Affects cash flows directly for property owners and real estate investors who would have more liquidity year-to-year.
- Broader economic impacts might include increased investment in the property sector, but might reduce overall government funding available for other programs.
- The policy could stimulate construction and real estate sectors, possibly affecting rental and property prices.