Many real estate trends are dominating the market, including the growth of short-term rentals, a heated residential market, growth in industrial space, and an uncertain office environment. These trends combined with increasing inflation and interest rates makes planning for 2022 more complicated than ever.

MACRS consists of two separate systems for depreciation: the General Depreciation System (“GDS”) and the Alternative Depreciation System (“ADS”). GDS is far more common and well known compared to ADS. Although there are situations when a taxpayer may elect to use ADS, most taxpayers only use the alternative system when it’s mandatory. When ADS is required to be utilized, tax planning can become quite a challenge.

In his latest piece in Accounting Today, Dave McGuire discusses the recent demand for short-term rentals and how investors are increasingly attracted to these properties to generate passive income. However, investors and their CPAs need to be aware of the depreciation rules that apply to the short-term rental market.

Cost Segregation is an extremely valuable tax planning tool that provides significant savings to real estate owners by increasing cash flows through accelerating depreciation deductions, but widespread misconceptions around these variables often lead taxpayers to leave a large amount of money on the table. Read about five common cost segregation misconceptions that our experts regularly observe.

Property owners that plan to demolish a building in the foreseeable future are often surprised by the unfavorable tax consequences that result from the action. Fortunately, there are a few ways to work around these tax requirements, including the use of a general asset accounts (GAA).

As 2021 comes to a close, CPAs and their clients need to be aware of real estate and tax issues as they complete year end planning. Wide ranging issues will affect how CPAs and their clients make decisions relating to depreciation and acquisitions over the next few months. These issues include potential changes to the U.S. Tax Code being debated in Washington, increased inflation, and changes in the real estate market.

In this episode, Justin Gephart sits down with Justin Wood, Senior Manager in our Fixed Asset Services practice, to discuss the state of the practice, and what challenges we expect to help our clients with next year.

McGuire Sponsel was contacted by a CPA firm to conduct a 45L study for newly constructed single family townhomes in West Lafayette, IN.

Cost Segregation studies are widely known to be a valuable tax planning tool for when property owners are acquiring, constructing or renovating a property. However, there are also other times that cost segregation studies can provide value that may be overlooked, such as when a step-up-in basis occurs.

One of the acceptable methods of completing a cost segregation study includes the use of statistical sampling.  According to the IRS Audit Techniques guide one method for completing a cost segregation study is utilizing a Sampling or Modeling Approach. However, there are many considerations to consider when completing a sampling review.