New IRS Rule will Help the Country’s Struggling Commercial Real Estate Sector

Commercial real estate owners and developers will get some much-needed flexibility to rework their mortgages or receive loan extensions under a new federal tax rule that could provide some relief to a deeply troubled sector of the real estate market. The new Internal Revenue Service rule will affect loans that are backed by office parks, office buildings, shopping malls and other types of commercial real estate that have been securitized and sold to investors. The owners of commercial real estate that have been battered by tighter lending policies and plummeting property values have had a very difficult time negotiating with lenders on extending and refinancing loans. Many owners are perilously close to defaulting on or already have had to default on loans, particularly loans taken out a few years ago when the commercial real estate market was hot. Typically, commercial mortgages take long periods of time to rework or extend and without this new rule, many more owners would default on their loans, worsening an already reeling commercial real estate market in most areas of the country. Many Real Estate Mortgage Investment Conduits—or Remics—and so-called grantor trusts, popular securitization vehicles for commercial mortgages, have been reluctant to rework or extend loans that aren’t in default or at risk of defaulting within 6 or 12 months because they fear losing their tax-exempt status. Due to the uncertainties inherent under the conditions, borrowers are very reluctant to invest in maintaining and renovating properties they may lose when these commercial mortgages come due. According to lender Deutsche Bank, $153 billion of securitized commercial real-estate loans are coming due by the end of 2012, and close to $100 billion of those will face difficulty refinancing. The new rule would grant lenders some room to negotiate with borrowers who are still current on their mortgage payments and the change applies to all loan modifications made after January 1, 2008. If you need help with Louisville Real Estate, Louisville Properties is here to help.  Call us at 502-744-9504 today.

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James Powell

Jim Powell has over 20 years of experience buying and selling luxury real estate in Louisville, KY and Managing over hundreds or rental properties across the city.
Jim Powell (License #191501)

Lauren Ghanavatian

Lauren Ghanavatian attended Assumption High School and the University of Louisville. Growing up in Louisville gave her a sense of the unique and diverse communities this city has to offer.

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Louisville Properties is a full service Louisville Real Estate Company for buyers and sellers of real estate. We offer the following services
3418 Frankfort Ave #100 Louisville, KY 40207 Louisville, KY 40207
United States
Phone: 1-502-744-9504

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