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Real Estate Articles

Real Estate Articles

QOZ Update – IRS Issues Additional Proposed Regulations

QOZ Update – IRS Issues Additional Proposed Regulations

The IRS has released a second set of proposed regulations on the new tax incentives for investments in Qualified Opportunity Zones (QOZs). The incentives, created by the Tax Cuts and Jobs Act, permit taxpayers to defer, reduce and even permanently exclude...

Using Cost Segregation Studies for Like-Kind Exchanges

Using Cost Segregation Studies for Like-Kind Exchanges

Property owners have long turned to cost segregation studies to take advantage of accelerated depreciation methods, including bonus depreciation and Internal Revenue Code Section 179 expense deductions. Accelerated first-year deductions don’t change the...

Rental Activities Qualify for New Tax Break

Rental Activities Qualify for New Tax Break

The Tax Cuts and Jobs Act (TCJA) created a significant new tax deduction for qualified business income (QBI) for so-called “pass-through” entities for 2018 through 2025. But it also created uncertainty about whether owners of rental real estate were...

When it Rains, it Pours

When it Rains, it Pours

Consider an IRR Waterfall for Your Next Development Project The internal rate of return (IRR) waterfall arrangement has gained popularity in recent years as a way to shift risk from equity investors, while rewarding developers for strong results. But no...

Is This Bargain-Priced Property a Diamond in the Rough?

Is This Bargain-Priced Property a Diamond in the Rough?

M&A due diligence With real estate values holding fairly steady over the past several years, investors are quick to jump on a perceived bargain. While getting rock bottom pricing isn’t a bad idea, investors need to be careful about doing their homework...

How Nonrecourse Loan Carveouts Jeopardize Personal Liability

How Nonrecourse Loan Carveouts Jeopardize Personal Liability

With the many types of loans available to borrowers, nonrecourse loans remain popular with borrowers because they can shield them from personal liability. But lenders will try to add “carveouts” to minimize that protection. If borrowers violate carveouts...

Use Artificial Intelligence to Benefit CRE Business

Use Artificial Intelligence to Benefit CRE Business

Artificial intelligence (AI) is bringing sweeping change to a wide variety of industries, and commercial real estate (CRE) is ripe for this technology. From marketing to property management, AI could expedite processes and cut costs in a range of ways. But...

What Not To Do In Like-Kind Exchanges

What Not To Do In Like-Kind Exchanges

Court Finds Sale-Leaseback Strategies Produce LoansThe Internal Revenue Code (IRC) has long allowed taxpayers to use like-kind exchanges to defer taxable gains. That doesn’t necessarily mean a like-kind exchange will go unchallenged by the IRS, though. A...

Historic Tax Credit is Alive and Well

Historic Tax Credit is Alive and Well

Prior to the passage of the Tax Cuts and Jobs Act (TCJA) in late 2017, the future of the Historic Tax Credit (HTC) for rehabilitating historic buildings was questionable. The HTC — also known as the federal rehabilitation credit — survived and remains a...

Is Seller Financing Right For Your Next Transaction?

Is Seller Financing Right For Your Next Transaction?

The commercial real estate market has been steadily making improvements since the 2008 financial crisis. While traditional financing is readily available, seller financing may be another viable option for many investors. Here’s what you need to know.Using...

Introducing the Opportunity Zone Tax Incentive

Introducing the Opportunity Zone Tax Incentive

IRS guidance answers taxpayers’ questionsOne provision of the Tax Cuts and Jobs Act (TCJA) was designed to spur capital investments in low-income areas. This new tax break allows investors to defer — or even eliminate — their capital gains taxes on investments in...

Three Fixes to Lease Accounting Rules for Landlords

Three Fixes to Lease Accounting Rules for Landlords

The new rules on accounting for leases have already taken effect for public companies and will apply to all other entities in 2020. While most of the rule changes apply to tenants, some of the provisions mark a departure for landlords — and many parties...

Crowdfunding Comes to CRE

Crowdfunding Comes to CRE

You’ve probably heard of Kickstarter and other popular crowdfunding platforms that are used to obtain funding from individual investors for everything from independent movies and music to health care and legal expenses. In the past few years, crowdfunding...

Don’t Wait to Purchase Business Interruption Insurance

Don’t Wait to Purchase Business Interruption Insurance

It’s important for real estate businesses to have adequate insurance coverage. And you can’t just cover the property itself. Natural disasters, as well as utility failures, may render properties temporarily or permanently unusable. Business interruption...

Is It a Gain or a Loss?

Is It a Gain or a Loss?

Tax Court determines amount realized is neitherThe U.S. Tax Court regularly hears cases regarding the proper tax treatment of property sales. Recently, though, the court addressed a real estate-related situation in Simonsen v. Commissioner that it...

IRS Targets Large Land Developers

IRS Targets Large Land Developers

Accounting for construction contractsThe IRS Large Business and International (LB&I) Division is currently pursuing a “compliance campaign” against large land developers of residential communities for improper use of the more taxpayer-friendly completed contract...

Investing 101

Investing 101

Tips for what to look for before buyingIn any real estate portfolio, the goal is to be profitable. And while the commercial real estate market has improved significantly since the lows seen during the Great Recession, investing still involves understanding...

The Homegrown Advantage

The Homegrown Advantage

Consider a community bank for your next loanHave you ever borrowed funds from a community bank? Real estate developers and owners often overlook this source of financing, but these lenders offer some distinct advantages for borrowers who understand what...

Ready for the New Lease Accounting Rules?

Ready for the New Lease Accounting Rules?

The Financial Accounting Standards Board’s (FASB’s) new standard for accounting for leases is poised to take effect for public companies and certain other entities for periods beginning after December 15, 2018. Although early adoption is permitted, other...

Real Estate Activities vs. Investments: Why it Matters

Real Estate Activities vs. Investments: Why it Matters

The characterization of a real estate entity’s activities as a business or an investment makes a big difference to the bottom line when it comes to taxation. In Conner v. Commissioner, a developer whose plans were derailed by the Great Recession recently...

C Corporation Acquisitions and the TCJA

C Corporation Acquisitions and the TCJA

What you need to knowInvesting in real estate oftentimes means holding the property in diverse types of corporations or partnerships. If you’re looking to purchase property and it’s held by a C corporation, do you know the IRS rules governing this kind of...

How To Opt Out of the New Partnership Audit Rules

How To Opt Out of the New Partnership Audit Rules

Many real estate businesses are formed as partnerships, and, beginning this year, the IRS is applying new procedures to its partnership audits. Under the procedures, any adjustments and penalties after an audit generally will be assessed against the...

Recent Legislation Encourages Low Income Developments

Recent Legislation Encourages Low Income Developments

Both the Tax Cuts and Jobs Act (TCJA) and Congress’s massive new spending package received widespread media coverage, but a couple of provisions that incentivize investments in low income housing have largely gone under the radar. One provision in the tax...

Documentation Matters in Real Estate Professional Exception

Documentation Matters in Real Estate Professional Exception

You certainly couldn’t be blamed if you thought a dentist wouldn’t qualify as a “real estate professional” allowed to deduct rental real estate losses — after all, the IRS thought the same thing. You’d be wrong, though. The U.S. Tax Court found that a...

HMWC proudly sponsors this year’s SPIRE awards

HMWC is a sponsor of this year’s SPIRE awards presented by Commercial Real Estate Women, Orange County (CREW-OC) which recognizes superior performance in real estate. The awards ceremony was held on Thursday, February 26, 2015. For more information, visit:...

Could the NIIT apply to the sale of your home?

The 3.8% net investment income tax (NIIT), which went into effect in 2013 under the Affordable Care Act, continues to create confusion. One aspect of the NIIT (also known as the Medicare contribution tax) that’s widely misunderstood is its impact on the sale of a...

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