We recommend that you work with an advisor that understands your situation and has the experience and expertise to help you accomplish your tax and estate planning objectives. Our consultants at Richey, May & Co. can assist you in evaluating whether your current situation is suitable for a private annuity trust, and can introduce you to qualified professionals with experience in preparing the required documents. The rehabilitation tax credit is available in connection with the qualified rehabilitation of a certified historic structure. A certified historic structure must be listed individually in the National Register of Historic Places, or be determined to contribute to a Registered Historic District. The property must be substantially rehabilitated with qualifying expenditures incurred during a 24-month period exceeding the greater of $5,000 or the adjusted basis of the building at the commencement of the 24-month period. Qualified rehabilitation expenditures generally consist of improvements made to the building structure and interior, and have a 27.5 year depreciation period (39 years for nonresidential rental). No rehabilitation credit is available for land costs, site improvements, enlargement of a building, personal property, or for building acquisition costs. A 4% annual credit is available if the building is constructed or rehabilitated with federal subsidies, or if an existing building is acquired and substantially rehabilitated. In the latter case, the present value of the credit is designed to be no more than 30% of the building's qualified basis. The low income housing credit is available for either new construction or substantial rehabilitation. A charitable contribution deduction for the fair market value of the facade easement contributed to an Internal Revenue Code Section 501(c)(3) organization is available. The deduction that the taxpayer is entitled to is equal to the fair market value of the easement, which is generally the decrease in fair market value of the property caused by the restrictions placed on the property as a result of the easement. The complexities and interpretations of the income tax law and regulations in the areas of tax credits and contribution deductions can be overwhelming. Our team of real estate tax professionals can assist in determining and maximizing tax credits and deductions available to real estate owners. Our financial consultants help you evaluate current operations from a financial perspective, and establish benchmarks for performance with comparisons to industry peer groups. Identification, monitoring, and holding your team accountable to your key metrics will keep you on the road to success. 5. STATE AND LOCAL TAX CONSULTING In the real estate industry, state and local tax planning has been an afterthought for many tax planners. State and local tax regulations are constantly evolving, becoming an increasingly important factor when dealing with tax compliance and planning. Due to the fact that many real estate operations use flow-through entities, such as LLC's, LLP's, LLLP's and S-Corporations, it is common to see considerable disparity in the tax treatment imposed by state and local governments related to an operation’s choice of entity. This is an important area of tax planning that is often overlooked. Our consultants realize and understand the constant changes and challenges that state and local governments impose and offer a wide range of services to address them, such as: Reviewing compliance requirements imposed by state(s) in which a company is currently operating or those where a company is considering expansion; Providing comprehensive tax compliance service for all state and local governments imposing filing requirements; Preparing composite returns for non-resident owners of flow-though entities to ease the tax compliance burden and potentially reduce overall taxes paid as a group; Evaluating the pros and cons of entity selection based on the type of real estate activity being conducted in each state in order to minimize tax compliance costs at both the entity and owner levels; Analyzing state net operating loss rules applicable at the owner level in order to determine which states allow non-resident owners to carry losses from real estate activities forward, losses which can be used to offset potentially significant gains in future years from the sale of real estate.
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