Four years ago, Donald Trump excited the real estate industry when he rose to the White House, referred to himself as "Builder President" and promised $ 1 trillion in infrastructure spending.
Since then, his tax audit has paused for investors like him, but hit home buyers in many states. The flash of spending on public projects subsided. The pandemic and weak incentive talks left much of the industry in trouble.
A number of submissions from real estate professionals now show more support for Democratic challenger Joe Biden than for re-election of a man with a background in business. An analysis by the Center for Responsive Politics shows that by the end of this year's race, Biden amassed $ 19.8 million from real estate professionals – about 19% more than Trump – expanding his lead in fundraising for the incumbent operator.
Long-time Trump friends have held back. The developer Stephen Ross of Related Cos. And Vector Group's Howard Lorber, for example, gave the Republican Party and Trump a total of $ 300,000 after his nomination in 2016 – about 50% more than that cycle through August.
Trump was reluctant to rush real estate aficionados to fund his campaigns. Of four people known to have attended a White House party on election night 2018 – Steven Witkoff, Richard LeFrak, Howard Lorber and Tom Barrack – Witkoff is the only one to have significantly increased donations this round and has more than quadrupled its donations to $ 930,000, records show.
Another exception to the withdrawal is California developer Geoffrey Palmer, a real estate mogul from the big city who, like Trump, followed his father into business. Palmer, like Trump, has extolled the depreciation power to avoid paying income taxes.
Of the $ 16.7 million that will flow from the real estate industry to the president's campaign and related committees this cycle, more than a third, or $ 6.4 million, comes from Palmer, who is prominent in Los Angeles , but is less known nationally. Federal Election Commission records show he gave little to national political figures before Trump received the Republican nomination in May 2016, but his donations have since exploded, reaching around $ 17 million.
Palmer has raised funds to Republicans who have the prospect of democratic control of the White House, Senate, and House. He has donated approximately $ 9.2 million to a list of candidates and committees they support for the federal agency. According to the Center for Responsive Politics, this has made him one of the 25 largest campaign donors in the country since the beginning of 2019.
Palmer did not respond to messages asking for comment on his support for Trump, nor to representatives from Ross, Lorber and Witkoff about their postponements in giving.
"President Trump's policies have improved the lives of families across the country and voters continue to support him while he continues to deliver for them," Republican National Committee spokesman Mandi Merritt said in a statement. "From historic tax cuts to record job growth, Americans of all economic backgrounds benefit from the president's successful policies, and the excitement is high as we step into the final weeks of this election."
Palmer has made no secret of his tax strategy. In a 2015 interview with Planning Report magazine, he boasted, "The magic of depreciation has meant we haven't paid federal taxes in the last 30 years." Trump announced a year later: "I love depreciation."
Even so, during his 2016 campaign, Trump vowed to use his knowledge of taxes to make the system more equitable for average Americans. In August, he said this would mean "filling in gaps in special interests that have been so good for Wall Street investors and for people like me." He said his tax plan would lower income taxes for everyone, especially middle-income Americans, but "the rich will pay their fair share".
Using depreciation to clear tax bills is a long-established practice in real estate investments. The tax code assumes that structures such as offices and apartments lose some of their value every year when they are used. By depreciating this wear and tear, taxes on cash generated by a property can be erased even as it increases in market value over the investment period, which has been the general long-term trend in many parts of the country.
Trump has used depreciation and other strategies to avoid paying income taxes for the past two decades, the New York Times reported last week. He paid just $ 750 in the year he was elected president and the same amount again in his first year in office in 2017. Trump has largely denied the Times’s coverage but failed to disclose how much he paid.
"I don't want to pay taxes," said Trump during the debate with Biden last week. "Like any other private person, unless they are stupid, they go through the law, and it is."
How key players in the real estate industry fared under Trump largely depends on where they do business. For example, Trump's tax overhaul in 2017 capped the amount of state and local taxes households can deduct from their federal income taxes and "hurt New York significantly," said Chris Mayer, real estate professor at Columbia Business School. Still, developers have been given new benefits, including opportunity zones designed to reward investments in poor communities, Mayer said.
Perhaps most importantly, Trump did not interfere with strategies that real estate investors rely on most. "The real estate industry has had many tax advantages for years," said Mayer. "Even though Trump changed other things, these benefits have largely remained the same."
In other key areas, Trump didn't deliver what real estate investors wanted. He failed to deliver on $ 1 trillion in infrastructure spending commitments and withheld funds on the $ 30 billion Gateway Rail project in New York. Such projects can benefit property investors by revitalizing communities and opening up new areas of growth. The Trump administration is now playing hardball with Democrats looking to rescue ailing local and state governments that have been badly hit by the pandemic.
In an interview with the New York Times in August, Ross said he hosted a fundraiser for Trump in 2019 in hopes of raising more federal money for New York State. "I've known President Trump for a long time. I know him and I liked him. I disagree with many of his guidelines. I believe there are many good things and I believe there are many bad things."
He told the publication that he hadn't decided whether he would vote for Trump this November.