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Retail Tenants Get Tax Break for Construction Allowances 

For years, federal income tax law was unclear about how to treat payments that owners or landlords make to tenants for construction allowances to improve leased retail space. Last September, the Internal Revenue Service adopted final regulations on previously created

S Corporation Shareholders Benefit From Supreme Court Ruling 

The U.S. Supreme Court recently ruled in favor of taxpayers in a potential windfall decision for shareholders of S corporations. Many small companies, including real estate related ventures, elect to be treated as S corporations with the Internal Revenue Service.

Review the Fundamentals of Section 1031 Like-Kind Exchanges 

Taxpayers planning to sell, purchase, or construct real property should review the possibility of conducting an Internal Revenue Code Section 1031 like kind exchange to defer the incurrence of federal and general state income taxes on the capital gain. To

Taming Your Taxes 

While property taxes are one of the most significant expenses affecting a property's bottom line, many owners don't take advantage of available strategies to reduce them. Especially in a slow economy, market and property specific factors should be considered to

A Taxing Workout? 

The slumping global economy and stagnant credit markets have taken a toll on nearly all commercial real estate properties. Many assets are struggling to generate sufficient income to meet financing obligations in the current market. As a result, many real

Creative Planning May Reduce State Taxes 

State and local taxes represent an increasing portion of the overall tax cost of any real estate transaction. As more businesses become national and even global, state and local tax planning become more crucial. In early March, the New Jersey

Constructive Receipt: Timing Is Everything 

A fundamental principle in efficient tax planning is the contemplation of the timing of income and loss events. While this principle seems relatively elementary, determining when a tax item actually becomes taxable can be more complex. Statutory Background IRC Section

Cost Segregation Helps Property Owners Maximize Depreciation Deductions 

While most property owners are aware of depreciation benefits, few take full advantage of them. It is rare that a building's entire cost is depreciated over the 39 year or 27.5 year life assigned to real property, but when owners

Exchange With Caution 

Congress addressed what it considered to be abusive sale leaseback transactions involving tax exempt entities, known as sale in, lease out, or SILO transactions, by creating Internal Revenue Code Section 470 as part of the American Jobs Creation Act of

Disappearing Lease Detour 

During the last several years, many tax deferred exchangers sold properties for a premium but found it challenging to locate and buy suitable replacement properties. Construction exchanges are a growing alternative because taxpayers can build value into the property to

Exchange Eligibility 

Joseph and Sara bought a three bedroom rental home that needed repair. After several months, they had completed the repairs and put the refurbished property on the market for substantially more than their original investment. Subsequently, a buyer put a

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

Estate Tax Repeal Affects Property Disposition by Beneficiaries 

On June 7, President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001, a $1.35 trillion tax cut plan. Among other things, this act provides for a phased in repeal of the estate tax with a full

Give & Receive 

Is a non productive commercial real estate asset draining your client's cash flow? What can you do to help get rid of this white elephant while still adding value to your business? Many investors and corporate real estate professionals are

Condemnation Caveats 

The U.S. Supreme Court recently agreed to decide the scope of a local government’s ability to use the power of eminent domain to take private property. Several New London, Conn., residents contend that the city’s condemnation of their homes

Big Breaks 

Last fall President Bush signed into law the American Jobs Creation Act of 2004, which provides additional deductions and reduced tax rates for many qualifying U.S. businesses. The AJCA is the most far reaching tax cut in years and benefits

IRS Clarifies Related-Party Rule in 1031 Exchanges 

Last December, the Internal Revenue Service published Revenue Ruling 2002 83, which clarifies its position on taxpayers buying replacement property from related parties under Internal Revenue Code Section 1031. Due to the considerable confusion about such exchanges, real estate professionals

Inbound Investments 

In the midst of an unprecedented commercial real estate boom, some investors, particularly those from outside the United States, believe assets currently on the market reflect bargain basement prices. As these opportunities spring up throughout the country, international investors are

Oil and Gas Options 

As commercial real estate prices continue to increase and investors seek new replacement property options to complete tax deferred exchanges, oil and gas investments are gaining more attention as viable alternatives. Internal Revenue Code Section 1031 classifies an investment in

Leveraging LIHTCs 

As the need for affordable housing increases across the country, more com mercial real estate devel opers are partnering with nonprofit companies to leverage access to low income housing tax credits as a source of project financing. Earlier this year

Power Savings 

The Energy Policy Act of 2005 contains tax incentives that can benefit owners of both new and retrofitted commercial property. Part of a $14 billion package, these incentives provide new deductions for green properties and improvements placed in service in

Considering Commercial Property Investments with an IRA 

With today’s fierce competition in the commercial real estate world, it’s important to find a way to distinguish oneself as a professional. Having a specialized knowledge of inventory possibilities and ideas for creatively funding investment projects can set you apart

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

A PAT Answer 

Editor's note The November December 2006 issue of Commercial Investment Real Estate contains the article "A PAT Answer," which discusses private annuity trusts as a tax deferral strategy. After the magazine was printed, the U.S. Treasury Department issued proposed regulation

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