5 Tax Tips You Need To Consider Before Your Next Deal
New York real estate vets know a comprehensive understanding of the tax laws that govern the industry can be quite useful. Anchin, Block & Anchin Real Estate Industry Group partners Marc Wieder and Mark Schneider caught up with Bisnow to discuss important tax tips to keep in mind when structuring a deal.
1. Section 1031
Section 1031 of the United States Internal Revenue Code states the exchange of certain types of properties can allow those involved to delay paying taxes on the return on the sale.
This provision applies to rental and investment properties. It can be either residential, commercial or land.
2. Deferring taxes by selling on an installment basis
When selling a rental property, owners have another avenue they can follow toward temporary tax-related savings.
Another strategy to defer some tax is selling a rental property on an installment basis. Tax payments can be deferred until monies are received.
3. Translating improvements into write-offs
For properties that an owner is holding onto, improvements can be translated to tax write-offs. Bonus depreciation and Tangible Personal Property regulations can result in significant write-offs.
4. Which rules can you use to your benefit?
Schneider said successful tax planning is about more than just knowing which rules can be used to an owner's benefit. It is also important to know exactly which rules apply and how they impact you.
He told Bisnow the rules governing bonus depreciation once only applied to lessees on their improvements, but now apply to the building owner on tenant improvements as well. Also, a building no longer has to have been in service for at least three years before it can be declared eligible.
5. NYC incorporated business tax
Condominium and co-op developers often fail to realize they are subject to the New York City unincorporated business tax if they are a partnership or LLC. This can lead to innocent — but still costly — mistakes come tax time.
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