- Cambaliza McGee LLP builds and rebuilds accounting systems that record all real estate transactions and activities—from rental service to property management.
- We also do accounting for purchasing and disposition of real estate properties.
- Investment property “swaps” for one or multiple properties that allow for tax deferment of capital gains
- Tax analysis to determine if a 1031 exchange is the most prudent option and/or what type of tax savings or liability may exist, before choosing to use this option
- Determining the deductible amount of interest expense on real estate loans
- Analyzing loan proceeds and how to best utilize for multiple purposes, considering interest expense must be sourced to determine deductible amounts
- Tracking and performing yearly analysis to ensure accurate IRS compliance
- Project cost/expenses must be capitalized to the balance sheet until the project is placed in service.
- Accurately recognize expenditures that can be deducted during construction, considering all expenses are not allowable from a tax perspective
When a property is purchased, not only does it include a building structure, but it also includes all of its interior and exterior components. On average, 20% to 40% of those components fall into tax categories that can be written off much quicker than the building structure. A Cost Segregation Study dissects the construction cost or purchase price of the property that would otherwise be depreciated over 27 ½ or 39 years. The primary goal of this type of study is to identify all property-related costs that can be depreciated over five, seven, and 15 years. For example, certain electrical outlets that are dedicated to equipment such as appliances or computers should be depreciated over five years.
CM works with experts in the cost segregation field to accelerate depreciation and save taxes for these types of entities:
- Apartment Complexes
- Assisted Living Facilities
- Manufacturing Operations
- Distribution Centers
- Commercial Buildings
When investors desire to join partnerships in the real estate industry, this calculation is often required. Financial decisions must be made to decide which election needs to be made and how it may affect current and new partners.
IRS Sec 740 often applies when a property is contributed upon a formation of a partnership. Any pre-contribution gain associated with this property needs to be considered during tax return preparation, property dissolution, and partnership interest exchange.