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Minnesota won't change taxes to match federal guidelines

You may have heard, if you're interested in commercial real estate, that the omnibus tax bill was vetoed in a recent session. The Minnesota Legislature did enact a number of property-related laws, but the bill that could have impacted commercial property owners was vetoed. The omnibus tax bill would have made the state's income tax arrangement fall in line with the federal Tax Cut and Jobs Act of 2017, but it would have eliminated Minnesota's current addback and subtractions.

The interesting thing about this is that the omnibus tax bill was supported by legislative leaders, but it was other factors that resulted in its failure. If it had passed, it would have allowed for bonus depreciation and Section 179 expensing, the current federal standards.

One reason the tax bill failed was that there is a fear of a housing and real-estate bubble. That previously led to the savings and loan crash that took place in the 1980s. Presently, legislators don't know how long the federal act will stay in place, so they're having to weigh the potential for a real-estate bubble in the future if the current benefits and changes are used in the state.

Commercial property owners need to stay apprised of situations like this one, because they can change what you pay in taxes and what kind of properties you want to invest in (and when you want to invest). Your attorney can help you understand tax implications if you are looking to purchase or sell a property in Minnesota; presently, the state does not follow federal guidelines.

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