Real Estate Losses Helped Trump Pay Next To No Taxes, Returns Reveal

Six years of former President Donald Trump’s tax returns were released Friday, documenting a sweeping use of real estate tax law that saw him pay less than $2M over his entire presidency and $750 or less in three of those years.

After a battle royale that made it to the U.S. Supreme Court, returns made public by the House Ways and Means Committee Dec. 30 showed Trump paid no federal taxes in 2020 and just $750 in 2016 and 2017.

Between 2015 and 2020, Trump paid a total of just under $1.8M in taxes on adjusted gross income ranging from a high of $24.34M in 2018 to a loss of $31.8M in 2015, using a range of tax code write-offs common in the commercial real estate industry. Those include depreciation and carrying over losses from one year to reduce liability in another.

The returns “show how proudly successful I have been and how I have been able to use depreciation and various other tax deductions as an incentive for creating thousands of jobs and magnificent structures and enterprises,” Trump said in a statement, which also warned the disclosure would have dire political consequences going forward and represented an invasion of taxpayer privacy.  

Though U.S. presidents have historically released tax returns voluntarily, Trump’s returns have been the subject of a protracted fight that dates back to before his presidency, culminating in House Democrats releasing the returns just before Republicans take over the majority Jan. 3.

It also comes as the former president mounts a campaign to regain his office while fending off multiple investigations and a finding his family business was guilty on all 17 counts at its criminal tax fraud trial in a New York court earlier this month.

Experts told several media outlets the long-awaited returns contain nothing that immediately stands out as illegal. But several noted the picture is incomplete given the multiple multitiered partnerships and S corporations Trump is tied up in that allow entities to pass corporate income, losses, deductions and credits through to shareholders. The documents released represent just seven of Trump’s more than 400 business interests, the BBC reported.

"He started out in real estate, and that creates a level of complexity between valuations, revenues, losses and depreciation,” Maryanne Monforte, a professor of accounting practices at Syracuse University, told the BBC. “That all means his return has an added layer of complexity that you might not see with other billionaires."

In 2020, the year Trump paid no taxes, he reported losses of $65.9M at some properties offset by $54.5M in gains at others, per Bloomberg, highlighting the favorable tax treatment the real estate industry enjoys as well as other strategies wealthy taxpayers employ to minimize tax bills.

“These findings underscore the fact that our tax laws are often inequitable, and that enforcement of them is often unjust,” Rep. Don Beyer, a Virginia Democrat on Ways and Means, said in a statement.

The Internal Revenue Service is still auditing the returns, however, with questions that could eventually mean millions in additional tax liability for Trump. One such question involves Trump’s generous use of carrying over losses, the L.A. Times reported — including a $102.5M operating loss claimed in 2015 that is thought to be tied to a $700M loss posted by Trump in 2009, which has never been verified by the IRS.

Documents released Friday also suggest the IRS could look into hefty business expense deductions that range from “disguised gifts” to Trump’s children to millions in write-offs surrounding Trump-owned estate Seven Springs in the New York suburbs, per the L.A. Times. Trump claimed the estate as a personal residence, then reclassified it as a business investment in 2014.

Other highlights of the tax returns include:

— Trump’s businesses greatly benefited from his own 2017 tax overhaul, including a near elimination of the alternative minimum tax, which previously blocked rich, high-paying taxpayers from using too many credits and deductions, Bloomberg reports. The overhaul allowed him larger write-offs on the interest on his loans and big deductions for equipment, per The Wall Street Journal.

— On the other hand, Trump was impacted by the the $10K limit on state and local tax deductions he also signed into law. Despite paying over $10M in state and local taxes in 2018, he could only deduct $10K.

— Trump held various overseas bank accounts, including in China, from 2015 to 2017. He also held accounts in Great Britain and Ireland during his presidency when he was setting foreign policy and negotiating trade, according to the BBC. In the first year of his presidency, Trump paid more in foreign taxes than in U.S. federal income taxes, the WSJ reported. The Washington Post reported he received more than $55M in income from more than a dozen countries, including Qatar and Azerbaijan, mostly for Trump-branded real estate partnerships.

— Among many reported real estate losses, Trump documented having lost $1.3M on $9.3M in revenue at the Central Park ice skating space known as Wollman Rink he previously owned, the WSJ reports.

— Documents show the IRS did not follow its own guidelines as Trump was not audited most of the time he served as president. Three out of the four years he served in office, the IRS failed to audit Trump’s tax return, Reuters reports. In response, the Democrat-controlled House passed a bill prior to the holidays that would force the IRS to initiate audits of presidents' tax filings within 90 days of their inauguration.

Though Trump's returns failed to produce a smoking gun, some critics said they were notable both for the huge write-offs and the fact his properties lost millions year after year despite his self-professed acumen as a businessman.

“He’s a staggering loser,” Steven M. Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center, told the L.A. Times.

“Businesses are supposed to be in the business of making money,” Kevin J. Brady, vice president and certified financial planner at Wealthspire Advisors, said in an interview with Bloomberg. “If they’re constantly losing money, it begs the question of whether they’re real businesses.”