{"id":103001,"date":"2022-10-03t00:00:09","date_gmt":"2022-10-03t04:00:09","guid":{"rendered":"\/\/www.g005e.com\/?p=103001"},"modified":"2022-12-22t00:39:22","modified_gmt":"2022-12-22t05:39:22","slug":"the-new-tax-opportunities-in-real-estate","status":"publish","type":"post","link":"\/\/www.g005e.com\/2022\/10\/03\/the-new-tax-opportunities-in-real-estate\/","title":{"rendered":"the new tax opportunities in real estate"},"content":{"rendered":"
maximize deductions and increase cash flow for real estate and construction clients.<\/strong><\/p>\n by hank berkowitz<\/em><\/p>\n with a new tax landscape on the horizon, there\u2019s never been more pressure (and more opportunities) for cpas to help their real estate and construction clients maximize deductions and increase cash flow.<\/p>\n more in tax practice:<\/strong> new small firm cost seg opportunities<\/a> | what gig workers want<\/a> |survey: big worries for u.s. and small business<\/a>\u00a0 | \u00a0working harder for every dollar<\/a>\u00a0 | \u00a0for a few: why busy season 2022 beats 2021<\/a>\u00a0|\u00a0\u00a0can the r&d tax credit be used to offset the amt?<\/a>\u00a0 |\u00a0\u00a021 reasons tax clients fire accountants<\/a>\u00a0 |\u00a0\u00a0unhappy about tax season?<\/a>\u00a0 |\u00a0\u00a0individual tax refunds up 13%<\/a>\u00a0 |\u00a0shut down the tax charlatans<\/a>\u00a0\u00a0 |\u00a0eight quick, easy ways to fix irs filing<\/a>\u00a0\u00a0 |\u00a0\u00a0a tax season worse than 2021?<\/a>\u00a0 |\u00a0\u00a016 traits of the best tax clients<\/a>\u00a0 |\u00a0irs under covid: heroes or goats?<\/a><\/p>\n exclusively for pro members.\u00a0<\/strong>log in here<\/a>\u00a0or\u00a02022世界杯足球排名 today<\/a>.<\/p><\/blockquote>\n \u201cwe\u2019re looking at some of the biggest changes to the tax regulation, code, stimulus in a generation,\u201d observed rick telberg, founder and ceo of 卡塔尔世界杯常规比赛时间, at the ct society of cpas virtual real estate conference, produced in association with bedford cost segregation \/source advisors.<\/p>\n \u201cthe whole restructuring of how the government takes in revenue and hands out revenue, it\u2019s going to be bigger than the massive tax reform act (tra) of 1986 under president reagan,\u201d noted telberg, adding that whatever happens under this administration and congress, it\u2019s going to be different. \u201ceven though we\u2019re making great strides on the vaccine front, we\u2019re still very early in the covid economic environment,\u201d telberg added. \u201cthe impact will be profound on all cpas, especially those with clients in commercial and residential real estate.\u201d<\/p>\n does the reduction in corporate tax rate reduce the benefits?<\/strong><\/p>\n \u201cwhenever we\u2019re talking about a deduction, it is certainly impacted by the tax rate of the tax filing entity, observed karen koch, cpa, senior director of bedford\/source advisors, who was also on the expert panel. \u201chowever, most real estate is in a pass-through entity\u2014not a c-corp. most pass-through entities have not enjoyed the luxury of a low 21% tax rate. so, the impact is still pretty substantial. even if you have a client that\u2019s in a 25% tax bracket\u2014the reduction of tax liability would still be greater than the lower rates that corporations enjoy.\u201d<\/p>\n tax credits for energy efficiency in march, the u.s. treasury released its green book in response to the new biden tax plan. \u201cwe\u2019re in the process of digesting it now,\u201d noted greg bryant, senior managing director of bedford\/source advisors. \u201ccertainly, on the energy side, there are some interesting and promising things. the government is proposing to extend the \u00a745l energy efficiency credit for five years\u2014and they\u2019re going to raise it another $500 per dwelling unit. also, on the \u00a7179d front, they\u2019re proposing to raise the commercial building energy efficiency deduction from $1.80 per square foot to $3.00 per square foot, which is very exciting news.\u201d for the partial deduction, bryant explained that the government is proposing to raise the deduction up to $1.00 per square foot for qualified lighting upgrades. \u201cthat\u2019s really promising from an energy perspective and certainly reflective of the energy-efficiency sentiment within the administration,\u201d bryant added.<\/p>\n opportunity zones<\/strong><\/p>\n one attendee asked the panel if investors in public qualified opportunity funds (qofs) have control over anything that would trigger a tax liability if the property were sold during the holding period. according to blake christian, cpa, tax partner in the park city, utah, office of hcvt, llp, the answer is no, you don\u2019t have much control over tax liability. \u201cmost qofs are set up as llcs and, as an individual investor, you will likely be a limited member,\u201d explained christian. \u201cyou can\u2019t control the exit. you can\u2019t control the overall strategy.\u201d<\/p>\n of the 120+ funds that hcvt has set up, christian said most were created by family offices or other wealthy individuals who had large recent exits from earlier investment positions. \u201cthey already have experience as business operators or real estate developers,\u201d noted christian. \u201crather than investing in other qofs, they\u2019d rather put their money in their own qof and have total control over the entire process and cut out a lot of fees.\u201d<\/p>\n as we start to emerge from the covid-induced recession, many worry that cash-starved cities and states will stick it to property owners to help pay for the massive stimulus and relief programs.<\/p>\n property tax storm clouds on the horizon another attendee asked the panel if there\u2019s any proactive planning that can be done for taxpayers in high property tax states like connecticut. according to josh malancuk, cpa, cmi \u2013 president, jm tax advocates, connecticut is an \u201cinteresting state\u201d because we\u2019re seeing many cases of notices being sent out before the appeal period ends in february. the window is short to react to notices if you have not prepared the appeal prior to the receipt of the notice. now is a really good time to investigate whether your property tax assessment is in line with fair market value because of that extenuating period.<\/p>\n another attendee asked the panel about the form that the government certification takes on for allocation to the primary designer. according to koch, it is simply called a \u201cgovernment allocation form,\u201d which you can google. you can also contact bedford\/source advisors to obtain a generic form. you want a form that shows your project and\/or purchase order number, a description of the project scope, the name of the property, the address of the property and the entity that wants to claim the deduction. \u201cthen the most important thing is to define if you are claiming 100% of the deduction.<\/p>\n koch said you can allocate based on square feet, but if you have multiple vendors around the table, \u201cyou might not want to allocate based on square feet because lighting, for example, may cover the whole building. instead, you want to allocate based on your percentage of the benefit.\u201d<\/p>\n for example: if you did 60% of the allocation of the energy-efficient equipment based on your p.o. or contract, you have to know the scope around the table. but the government entity can allocate it in any form that they want. they can name as many vendors as they want if they think they are each primary designers.<\/p>\n encourage clients to explain to the government entity that they have spent considerable time and energy developing to a higher level of technology with greater energy savings and higher performance of the equipment installed.<\/p>\n impact on 1031s and opportunity zones<\/strong><\/p>\n according to bryant, there\u2019s not great news on the horizon for 1031 exchanges, since the biden tax plan really wants to rein those in. \u201cit\u2019s probably going to change the dynamics in terms of how people conduct their transactions. but with bonus depreciation available at the 100% rate for assets with a macrs recovery period for 20 years or less for the next couple of years, that could certainly soften the blow for replacement property,\u201d bryant explained.<\/p>\n according to christian, the opportunity zone program will be a safety net for \u201cblown\u201d 1031s. \u201cafter the aforementioned green book came out, the white house announced they\u2019re planning on retroactivity for capital gains after april 28, 2021,\u201d noted christian. \u201ccongress must approve that and the rates, but they have certainly drawn a line in the sand.\u201d<\/p>\n construction and engineering firms can take advantage of r&d tax credits<\/strong><\/p>\n \u201clook for any time in which there is investment in efficiency or whenever you are stepping outside the comfort zone of the normal design and build,\u201d explained max vignola, ccsp, the r&d services technical sales director for bedford\/source advisors. \u201ca lot of the trends are going toward space utilization. even when it comes to cross-country travel, remote working and designing motor homes and vans. the engineering solutions that some of these companies are getting into are truly innovative and should qualify for valuable credits,\u201d noted vignola, such as the engineering analysis required to determine how to fit four people into a van, with sleeping space, cooking devices, etc. different technologies must be incorporated. \u201cmost people don\u2019t think of these design problems as r&d qualifying activities, but they can be if you\u2019re trying to create something new or innovative for your customers\u2014a new feature\/benefit,\u201d added vignola.<\/p>\n \u201ci can\u2019t tell you how many times we run into clients who are doing truly innovative things and don\u2019t realize they could be claiming valuable r&d credits for doing so,\u201d remarked bedford\u2019s koch. \u201cwe\u2019ve found that just about every company has some unique software development. in working with your clients, help them understand how they write their contracts. so, if they out there purchasing, they could have a vendor who\u2019s developing the software, but you want to make sure your client is considered \u2018at risk\u2019 and they\u2019re writing these contacts so they can qualify for the credit. someone is going to get the credit along the value chain. make sure it\u2019s your client and that they\u2019re considered at risk for doing it. there is some uniqueness that max and i always look for when reviewing our clients\u2019 contracts.\u201d<\/p>\n the opportunity<\/strong><\/p>\n with one of the most significant tax overhauls in a generation coming on top of building supply-chain and labor shortages and a rapidly accelerating post-covid economic rebound, cpas have an unprecedented opportunity to provide value to their real estate and construction clients. practitioners who stay ahead of the curve will be ready for the challenge.<\/p>\n","protected":false},"excerpt":{"rendered":" maximize deductions and increase cash flow for real estate and construction clients.<\/strong><\/p>\n by hank berkowitz<\/em><\/p>\n","protected":false},"author":2587,"featured_media":103006,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","footnotes":""},"categories":[3184,1905,5,3120,3002,1906],"tags":[],"class_list":["post-103001","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-advisory","category-clients-and-service","category-outlook","category-pro-member-exclusive","category-special","category-tax-practice"],"acf":[],"yoast_head":"\n
\n<\/strong>the new administration has made it clear that it will support incentives for reducing carbon footprints on the planet. for instance, the \u00a7179d commercial buildings energy efficiency tax deduction primarily enables building owners to claim a tax deduction for installing qualifying systems and buildings, and it\u2019s now a permanent provision.<\/p>\n
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