Commercial Real Estate Blog by Madison
Tag Archives: cost segregation

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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Classifying Aging Real Estate Assets: Is Cost Segregation Only for New Properties?

By: Moshe Hildeshaim, Director of Operations, Madison SPECS, LLC

Benjamin Franklin’s statement on the certainty of death and taxes is a basic truism. Yet, unlike the grim reaper, there are some methods which can be used to defer the tax man. Under the federal tax code, a cost segregation study can identify personal property assets and separate them from real property assets. In general, buildings can be depreciated over either a 27.5-year or a 39-year period, but certain categories of fixed assets within a building can be depreciated more quickly, over five, seven or 15 years. Reclassifying personal property assets to shorten the depreciation time can significantly reduce the property owner’s current income tax obligations.

Real property that has been purchased, constructed, expanded or remodeled since 1987 is eligible for cost segregation. The best time to conduct a cost segregation study is the year that the property is placed in service by the current taxpayer. Owners of new acquisitions and construction projects are excellent candidates for maximizing depreciation deductions. However, many real estate investors don’t realize that older properties can also benefit from a cost segregation study. How so? Continue reading

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The Emperor’s New Reg’s – New IRS Guidelines May Open New Cost Segregation Opportunities for Property Owners

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

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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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A Penny Saved Can Be Many Pennies Lost

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

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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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Madison CRES Experts Scheduled To Attend ICSC RECON 2012

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

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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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