THE IMPACT OF THE TAX REFORM ACT OF 1986 AND THE FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT OF 1989 ON COMMERCIAL REAL ESTATE

This dissertation tests the effect of both the Tax Act of 1986 and FIRREA on commercial real estate values by controlling for both property type and regional differences as well as economic growth, supply and demand for property, and capital availability. This study is significant in that it will provide a better understanding of regulatory effects on commercial real estate values in different markets. It will also help to better understand the causes of the Savings and Loan Debacle that led to many failures. The study will provide economic information that can be used in designing future regulations. The study should be relevant to the real estate, investments, financial institutions, and taxation sets of literature.; Ten separate hypotheses are tested regarding the effect of these regulatory acts on commercial real estate values, five hypotheses for the effect of the Tax Act and five hypotheses for the effect of FIRREA on each of the five types of commercial real estate. A cross-sectional time-series multiple regression model is used to determine if there was a significant effect on commercial real estate values due to the Tax Act of 1986 and if the effect of the Tax Act of 1986 on each type of real estate differed by region. A similar model is used to test whether there was a significant effect on commercial real estate values due to the passage of FIRREA on each of the five types of real estate and if the effect differed by region. The regression model controls for economic factors such as national and regional economic growth, construction, mortgage flows, and uses dummy variables for the regulatory acts, regions, and interaction variables.; The results show that the Tax Act of 1986 resulted in a significant negative effect on all five types of commercial real estate. Similarly, FIRREA resulted in a significant negative effect on all five types of commercial real estate although the effects were much less pronounced than those due to the passage of the Tax Act. (Abstract shortened by UMI.).