3 Year-End Tax Opportunities You Should Be Reviewing
As year-end approaches, real estate owners should take a closer look at these three tax strategies:
1. Qualified Improvement Property (QIP)
Planning improvements before year-end may create valuable depreciation opportunities–but not every improvement qualifies as QIP. The IRS excludes certain costs, including building enlargements, elevators and escalators, and structural framework.
If you’re investing in improvements, make sure someone who understands the rules is evaluating the project. And when it’s time to complete your Cost Segregation Study on the property, make sure you partner with someone who understands the regulations.
2. Qualified Production Property (QPP)
For industrial and manufacturing clients, the new QPP rules create a significant opportunity. Eligible taxpayers may elect to deduct up to 100% of the depreciable basis of qualifying production property in the first year. But the rules are highly specific–including requirements around the type of production activity, when construction begins, when the property is placed in service, and how the election is made.
The details matter, so make sure you select a Cost Segregation expert that pays attention to the little things alongside the big ones.
3. Property Sales & 1031 Exchanges
If you’ve sold–or are planning to sell–investment real estate, don’t wait until year-end to consider your 1031 strategy. A like-kind exchange can involve both carryover basis and excess basis in the replacement property, making the basis treatment an important part of the planning process.
The tax code gives real estate owners opportunities, but those opportunities come with rules. Make sure you partner with someone who understands the guidelines and can uncover all the ways to save.
Experience Matters.
Scarpello Consulting has been helping property owners navigate complex depreciation and Cost Segregation issues since 2001. Our team of engineers, accountants, and tax professionals can help identify opportunities, document the analysis, and work alongside tax advisors to get the job done quickly and accurately.
If you or your clients are making improvements, building facilities, or selling and replacing real estate before year-end, now is the time to start the conversation.
