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QER Expenditures May Provide Tax Breaks for Brownfield Redevelopers: When commercial real estate professionals advise their clients on redeveloping brownfield properties, they should consider the tax implications. The treatment of costs incurred to remediate environmentally damaged sites might affect a project's economic feasibility. Remediation Cost Considerations The time during
Leasehold Interests Offer Alternative 1031 Exchange Options: Typical Internal Revenue Code Section 1031 exchanges involve the sale of real estate and the acquisition of like kind replacement property. Basically, property held for investment is like kind with any other property held for investment. Fee title investment real
New Tax Rules Offer REITs More Flexibility: Significant new federal income tax rules governing real estate investment trusts will allow REITs to compete on a more level playing field. Without being penalized, REITs now may operate and maintain control of companies that provide valuable services to their
IRS Ruling on Passive Activity May Offer Tax Break Possibilities: Taxpayers often consider depreciable real estate a viable investment vehicle because of its potential for capital appreciation and cash flow and its inherent qualities as a tax shelter. From a purely tax perspective, depreciable real estate historically provides a positive
The Benefits of Cost-Segregation Studies: When a commercial property is purchased or constructed, a building asset is created and the dollars are entered into a fixed asset system as 39 or 27.5 year property. Using the straight line method,
History in the Making: By taking advantage of rehabilitation tax credits sprovided under Internal Revenue Code Section 47, owners or developers of historic properties can inject significant equity into their real estate projects to cover funding gaps, increase project amenities, or avoid expensive bridge
Cost-Segregation Solutions: Cost segregation is an accepted Internal Revenue Service method of allocating the purchase price paid for real estate property. Generally, cost segregation enables owners to increase the depreciation deductions from their properties, providing substantial present value benefits by reducing income
Clarifying Entity Classification Conversions: Two recent Internal Revenue Service rulings on the tax treatment of converting single member limited liability companies into partnerships and vice versa likely will affect the commercial real estate industry because many transactions take place with partnerships and other entities
IRS Provides Guidance on Using Tenancy-in-Common Interests in 1031 Exchanges: On March 19, the Internal Revenue Service released Revenue Procedure 2002 22, which addresses the use of real property fractional ownership interests as replacement property in Internal Revenue Code Section 1031 tax deferred exchanges. Commercial real estate professionals commonly refer
Partnerships Can Use These Methods to Protect 1031 Gains: Property owners wishing to dispose of appreciated assets often use Internal Revenue Code Section 1031 exchanges to defer capital gains taxes. However, partnerships wishing to execute exchanges face unique challenges, particularly when individuals in the partnership have diverging investment goals
QRPBI Exception Calculations: Two calculations must be applied that limit the amount of excludable cancellation of debt income when utilizing the qualified real property business indebtedness exception to COD income. While these calculations are complex and not comprehensively covered in this article, this
Partnership Abandonment May Not Be a Capital Offense: When selling real property, individual taxpayers generally prefer to declare the profit as a capital gain rather than ordinary income because of the lower marginal rate on capital gains. But in the case of losses, this logic often is reversed
Taxing Changes: In the wee hours of Jan. 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 and the tax changes that resulted will drastically alter the way commercial real estate professionals plan for major transactions. Additionally, tax provisions written
Forming a Tax Plan: The real estate industry generally fares well under the 2017 Tax Cuts and Jobs Act, but many new provisions heighten the importance of advance tax planning for real estate investors.
Main Street Win: The recent court decision of South Dakota v. Wayfair is a win for commercial real estate, brick-and-mortar businesses, and state and local governments alike, bringing similar taxes to online and brick-and-mortar transactions.
Navigating Stormy Seas: For most real estate analysts, the beginning perspective for retail real estate market analysis is often a site in search of a user, according to “A Rational Approach to Feasibility Analysis” in The Appraisal Journal. This is consistent with the theory that a user can pay the most to occupy a site since the user can place it into productive use immediately. An astute investor or developer values the property based on what the user can afford to pay to occupy the space.

The Graaskamp Legacy reiterated the Graaskamp courses of action that exist in real estate feasibility, which include the site in search of user, site selection, and an investor looking for an investment property.For years, the Chicago Housing Authority was the poster child for development gone wrong. Cabrini Green, for example, became a breeding ground for crime and was far more dangerous than the housing it replaced. On the bright side, Austin, Texas, shows how good development planning enhances a city's prosperity enticing more companies and employees.