Written by Danny Wechsler
In December of 2011, the IRS published new temporary regulations (T.D. 9654) in relation to capital expenditures under Sec.263(a). I bring this topic up now because the American Institute of Certified Public Accountants (AICPA) recently released a paper discussing these new regulations. Continue reading
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
By Moshe Becker, CPA, Madison Commercial Real Estate Services
The other day I was sitting with a long time friend who owns a number of investment properties worth ten’s of millions of dollars. As Cost Segregation is the professional world in which I live, right away my antennas went up and I asked how he is treating the fit out for accounting purposes. His response was that he is not actually performing the fit out, but rather is giving the tenant a rent abatement. I asked him the question as to whether he considered the ramifications of the trade off for the loss in rent versus the revenue that he should have received. I didn’t need a response. His facial expression said it all! Continue reading
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
The leadership at Madison Commercial Real Estate Services (MCRES) will be attending and exhibiting at RECON 2012, the largest retail commercial real estate convention in the world. Hosted by the International Council of Shopping Centers, the RECON Show will be held in Las Vegas, NV from May 20-23, 2011. This is a rare opportunity for commercial real estate property owners and their advisors to meet privately with all of Madison’s top brass – in Madison’s private conference rooms at Booth S541, at the corner of W Street and 54th Avenue in the South Hall — to review and gain insight of how best to improve the ROI of one or multiple properties. To schedule an appointment with Madison’s Leadership Team at RECON 2012, contact Keren Peters at 732-333-2471 or kpeters@madisoncres.com to coordinate a meeting date and time. Continue reading
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
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
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
So what does free stuff have to do with cost segregation? I’m glad you asked, because the answer actually provides something that lasts a lot longer than that combo stress ball-flashlight that you realized was the one thing missing from your life and had to have at the last trade show you attended. Cost segregation provides commercial real estate owners and tenants with actual cash to the bottom line. Continue reading
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
