Insurance is a fact of life for real estate investors. From start to finish, each project needs to have the proper insurance. The time to wonder whether you’re properly insured is before there’s an issue. To be safe, hiring a qualified professional to help you conduct an insurance coverage audit may be necessary. Coverage audits can reduce the odds of an uncovered incident undermining the project’s profitability — or worse. (more…)
Proposed Regs Clarify Rehabilitation Credit
The IRS has released proposed regulations regarding changes made to the Internal Revenue Code’s Section 47 rehabilitation tax credit under the Tax Cuts and Jobs Act (TCJA). The regulations address several taxpayer concerns that have arisen in the wake of the law’s passage, including how the credit should be allocated. (more…)
Consolidated Appropriations Act - 3 Provisions for the Real Estate World
Late 2020 saw the enactment of a massive new federal spending law. Much of the media attention focused on the relief related to COVID-19, but the Consolidated Appropriations Act (CAA) also includes some tax-related provisions of particular interest to real estate owners and developers. Here are some tax law changes you should know about. (more…)
Can You Deduct Travel Costs to Monitor Properties? U.S. Tax Court Says Yes, Within Limits
The Internal Revenue Code allows the deduction of “ordinary and necessary” business expenses, including travel expenses while away from home overnight for business. A recent ruling by the U.S. Tax Court is a good reminder that the deduction is subject to some restrictions. (more…)
Dinner’s on Me! Big Changes to Meal and Entertainment Expense Deductions
Players in the real estate industry have long incurred meal and entertainment expenses while conducting business. But in recent years, there’s been some confusion about what’s deductible and what’s not, given that the Tax Cuts and Jobs Act (TCJA) placed some new limits on the meal and expense deduction beginning in 2018. Now the deduction for qualifying meals has temporarily increased to 100%, and some IRS guidance has provided more clarity on the TCJA’s limits.
Use of Delaware Statutory Trusts for 1031 Exchanges
By Jillian Pace, CPA, Tax Manager
ASL Real Estate Group
Real estate investors have long used 1031 exchanges to defer capital gains and other taxes from the sale of “like-kind” properties. In recent years, there have been some issues with typical 1031 exchanges such as finding replacement properties, complying with the required property identification and purchase time requirements, investing all sale proceeds from the exchange, seeking diversification, etc. Real estate investors may want to consider some alternatives to typical 1031 exchanges to help avoid these types of issues. One increasingly popular alternative is the use of Delaware Statutory Trusts. (more…)
Tax Considerations for the Sale of Real Estate
By Ivette Carrasco, CPA, Tax Manager
ASL Real Estate Group
There are different tax treatments to consider when selling your real estate property. The property can be classified as a primary residence, a real estate rental, an investment property, or a second home/vacation rental. The applicable tax consequences on the sale of a property depends on how the asset was classified in the current and prior tax years. It is important for real estate owners to be aware of the various tax implications that a real estate sale can trigger. (more…)
Like-Kind Exchanges After 2017 Tax Cuts and Jobs Act
By Samantha Ramirez, CPA, Tax Manager
ASL Real Estate Group
A like-kind exchange, commonly referred to as a “1031 exchange”, allows for the deferral of gains from the sale or exchange of business or investment property, as long as the exchanged properties are considered like-kind. Any money or property received that is not like-kind is ineligible for gain deferral and is considered a taxable event. After the 2017 Tax Cuts and Jobs Act (TCJA), the classification of like-kind was limited to include only real property. With the new, narrower definition of like-kind, the IRS issued proposed regulations in June 2020 that defined real property for the first time for purposes of Internal Revenue Code Section 1031. Recently, the IRS issued final regulations that adopted most of these proposed regulations, with some notable changes and clarifications. Below is a summary of the most recent changes. (more…)
California Voters Pass Proposition 19 - What Happens Next?
By Anu Joshi, CPA, Senior Tax Manager
ASL Family Wealth & Individual Tax Group
California Proposition 19 – Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment (2020) – was approved on November 3, 2020, with a slim margin of 51.1% of voters supporting it. The proposition eliminates two provisions of Proposition 13 that were very beneficial to property owners. The effective date of the changes made by Proposition 19 are:
- For Base-Year Value Transfers – April 1, 2021, and later
- For Parent to Child Transfers and Grandparent to Grandchild Transfers – February 16, 2021, and later
What do these changes mean for property owners? (more…)