July / August 2019
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 eligible for the deduction. This article reviews recent IRS guidance addressing this gap, including a proposed safe harbor that allows certain real estate enterprises to qualify as a business for purposes of the deduction.

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 before closing. A bargain can quickly turn into a problem if you fail to consider more than just the price. This article presents five other factors to consider.

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 capital gains on their investments. This article highlights the proposed regulations — most of which real estate investors can rely on until final regulations are published — including several provisions that are favorable for real estate investors. 

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 total amount of tax that’s owed over an asset’s useful life, but they do change the timing of deductions, which lowers taxes and generates extra cash flow in the year an asset is placed in service. This article examines how, thanks to the Tax Cuts and Jobs Act (TCJA), the studies may also help taxpayers secure greater tax savings in so-called “like-kind” exchanges under Sec. 1031.

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