Commercial Real Estate Blog by Madison
Tag Archives: accelerated depreciation

Off-the-Wall Savings – How Businesses with Demountable Walls are Saving on Taxes

By: Eli Loebenberg, CPA, Chief Executive Officer, Madison SPECS

The traditional office workspace has come a long way since the classic mahogany desk in a corner office. Thanks to technological advances, many employees can and do work from anywhere, which makes creating a vibrant and thriving office a new challenge. Today’s leading companies are creating office space that encourages collaboration with an interactive atmosphere. The modern office environment focuses on the employee experience within the company culture.

Many times, this environment is created with moveable office space made from demountable walls. Demountable or moveable walls are partitions that are pre-engineered and manufactured. Demountable walls offer businesses a simple way to build out and customize their work space.

Companies opt for walls that can be configured with customizable panels and different options for desk and storage spaces. These flexible interiors allow organizations to change the aesthetics, functionality and size of various office spaces in order to suit changing needs. Demountable walls also come with technological add-ins, such as plug-and-play power and data, so there is no need to rewire cables every time there is a change.

This trend in demountable walls has spread to corporations, educational institutions, health care and government organizations. While the initial project costs for demountable walls are higher than standard construction, this cost difference can be offset by major tax savings. Continue reading

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Shopping Malls Get a Facelift and Find Savings by Accelerating Depreciation

By: Eli Loebenberg, CPA, CEO, Madison SPECS

Popular media is full of gloom and doom predictions regarding the death of the shopping mall, citing the fact that 400 shopping malls in the US have been repositioned or closed in the past decade, and no new shopping malls have been completed since 2009. However, the shifting landscape of retail markets does not signal the death of the shopping mall. Rather, the traditional shopping mall is experiencing an evolution as investors and developers work to meet the changing needs of the next generation of shoppers.

There are many influences which are changing the shape and direction of the traditional American shopping mall. Competition among regular retailers is stiffer than ever, as online shopping and new delivery channels erode sales for “brick-and-mortar” stores. As a result, many department store anchors have disappeared due to bankruptcies and consolidations. And, consequently, the focus of the shopping mall industry has shifted. The success of today’s shopping mall depends on the quality and character of its public environment, as much if not more than the quality of its shopping. The mall has become a gathering place, a location where people interact comfortably and spend time with others. In essence, its become the social hub for physically connecting and interacting with others.

While new construction has stalled, developers are rehabilitating and repositioning existing mall sites across the country. Renovating an aging mall is a tremendous investment. Thankfully, the IRS does give direction in the classification and examination of improvement costs, in order to recover costs through depreciation of tangible property. Continue reading

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Early Retirement for your Assets

By Moshe Hildeshaim

While you may not be able to retire early, certain depreciable assets in your real estate portfolio may be eligible for early retirement. While we are all familiar with the concept of a cost-segregation study, there is another aspect to a cost-segregation study that – although not as well known – offers the potential of huge tax savings. This is known as the “write off component”. It is what should happen when you decide to renovate a property and remove its original assets. Continue reading

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We Don’t Want Your Business!!

As a company with services to offer, we are (as are all other businesses) inherently always in the “sales mode”. This is what it takes to stay ahead of the pack, or at least to be in the race, in today’s environment. No matter what place or setting in which we find ourselves, our antennas are tuned for the next opportunity to ‘bring home the bacon.’

This blog, however, is called ‘The Trusted Advisor’. It’s titled this way because we view ourselves as the trusted advisor to commercial real estate investors. As a trusted advisor, our role is to objectively present all sides of the business opportunity and hopefully steer our client in the best direction for the client’s bottom line, not ours. I’ve often advised clients not to move forward with one or other of our services when I felt it wouldn’t produce the results they were looking for or generate the proper return on their investment. Continue reading

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Lessons Learned From AmeriSouth vs. Commissioner

A recent tax court memo raised a lot of questions regarding cost segregation. I would like to give
you some clarification and perhaps even answer some of those questions. Continue reading

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Hidden in Plain Sight – Tax Benefits in your Commercial Property Leases

The value of any commercial real estate asset is typically found in its retail, office or industrial leases. A thorough understanding of these leases is essential for a profitable acquisition and successful property management. That’s why real estate investors need and should accept nothing less than having meticulous and up-to-date lease abstracts before making any acquisition of a shopping center, office building, warehouse, industrial facility, etc.

In addition to the investor’s standard focus on cash flow and revenue generating potential, a savvy investor will also analyze the leases for the tenant improvement clauses to determine whether any of the improvements are legally owned by the landlord. The question of TI ownership is crucial as the owner of the improvements may be able to benefit from a cost segregation study, where eligible assets can be identified and reclassified for accelerated depreciation. Continue reading

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Tax Court Advises Taxpayers To Leave Cost Seg To The Pros

Your smart accountant recommends using a cost seg expert. But you think to yourself: Why can’t I just segregate the costs myself? Why bother hiring someone to prepare a study? I know what these buildings cost me. I can use a “rule of thumb approach” and estimate the costs. Before you go down that road, you may want to hear the story of what happened to Ronald and Daryl Pearce. Continue reading

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100% Bonus Depreciation: Additional Tax Benefits for Business Owners and Investors

For construction or renovations begun after September 8, 2010 and completed before December 31, 2011, the MACRS assets with Class Lives of 20 years or less can potentially receive 100% Bonus Depreciation – meaning full depreciation taken in the first year. The key is for the assets to have been paid for or the costs to have been incurred within the dates mentioned, with detailed records validating same. Continue reading

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