How Jared Kushner likely avoided paying taxes on his income for about seven years is a lesson in the business of real estate.
The White House senior adviser and former chief of Kushner Companies may have paid little, if any, federal income tax for years between 2009 and 2016, according to documents obtained by the New York Times that show Kushner’s businesses, earnings, expenses, debt obligations and some information from his federal tax filings. The Times reported the documents were prepared last year for an institution contemplating loaning funds to Kushner.
Kushner registered an estimated net worth of nearly $324 million, bringing home millions in salary and gains from his various investments. But his taxable income has been negligible, the documents show. More than a dozen tax attorneys and accountants who reviewed the documents at the request of the Times said the primary reason he paid little if any in federal taxes is depreciation. In the eyes of the IRS, real estate depreciates over time, so there is a provision that allows property owners to deduct a part of the cost related to their assets each year.
The depreciation provision allows Kushner — like many in the industry — to deduct the value his family’s company real estate portfolio loses each year on his personal tax return, regardless of whether the value of the building goes up or down, or whether assets were bought with personal or borrowed money.
The strategies of calculating depreciation are seldom audited, which allows wide variance and gives real estate investors the opportunity to determine the size of their deductions without much oversight.
As the spokesman for Kushner’s lawyer told the Times, “Mr. Kushner properly filed and paid all taxes due under the law and regulations.” The newspaper’s independent review of the documents did not reveal any wrongdoing on the part of Kushner.
Attorney Jonathan Blattmachr, one of the experts who reviewed Kushner’s documents for the Times, told the publication that “If I had to live my life over again, I would have been in the real estate business.” [NYT]–Erin Hudson