Tax Consulting for Real Estate Companies
Helping real estate companies find good news despite bad situations
While we remain stuck in this historic downturn waiting for equilibrium to return, the importance of considering the tax consequences of every business decision is more crucial than ever for real estate companies.
In almost every circumstance from abandoning construction plans to handling lease cancellation payments, there is a myriad of considerations that can significantly affect the amount of taxes due.
Having the facts to make tax saving decisions
These are complex situations and our tax experts that specialize in serving the real estate industry are up to date on the rulings and can model the outcomes of various scenarios so that you can make the decision that saves the most tax dollars for your organization.
Minimizing taxes on cancellation payments
For instance, if one of your tenants cancels its lease, the nature and timing of the cancellation payment can have significant tax ramifications for you, the landlord. In a situation like this, you will benefit from our tax specialists’ experience working with more than 1,000 clients in the real estate and construction industries.
They can help you structure the receipt so that the collected amount can be taxed at a lower rate. Many times correctly structuring a receipt means the difference between having the payment taxed as ordinary income or capital gains.
Because of the general downturn and tight credit, real estate companies are facing an unprecedented number of lease cancellations and properties are facing foreclosures. Some have to cancel construction plans or at least stall them.
When can you expense the interest on a stalled construction project?
If you are thinking about suspending work on one of your projects, our tax specialists can help you follow the rules of Section 263A of the Internal Revenue Code (IRC), and document the reason production stopped and when it stopped. In most cases, “Suspension of the Production Period” comes 120 days after physical work ceases.
Why is it important to document suspension of production? When production stalls, you can begin expensing your interest rather than capitalizing it as a project cost, offering you additional tax minimization opportunities.
Can you afford to abandon your project?
This economy is demanding real estate companies make many hard decisions. One of them is whether or not to abandon real estate project. If you’re faced with a decision like this, you will appreciate the experience and skills of our tax specialists. They can help you determine the tax consequences of abandoning the project and weigh the impact abandonment will have on your bottom line.
Selling to related parties
Our tax experts can also help you maneuver through the complex related party tax rules and devise a plan to claim a tax loss on properties that have been impacted by the decline in real estate prices. If the transaction is properly structured it may be possible to take the loss sooner and realize the tax benefits earlier.
Our tax team serving real estate is well versed in the tax ramifications of restructuring debt. If there is a way to avoid tax on the restructuring or forgiveness of debt, they will find it. They can help you develop tax minimization and net operating loss tax strategies, and can negotiate standstill agreements.
Finding tax incentives to move forward
In addition to tax minimization strategies, they also can help you find the tax incentives that you might need to move forward. If you want to leverage new markets and historic tax credits or deductions for energy-saving improvements, they have the experience you need to make the tax incentives work for you.
You can depend on the tax specialists at Plante Moran to help you find tax minimization opportunities and help boost your cash flow despite the current tough economy.