Maximizing Real Estate Tax Efficiency
Experts discuss everything from 1031 exchanges to opportunity zones.
OLYMPIC VALLEY, CA—During the Navigating Real Estate Tax 101 Guide session at the GlobeSt Women of Influence conference held at the Everline Resort and Spa in Olympic Valley, CA, Kelly Smith, Partner at Bennett Thrasher LLP, and Jenna Walker, Tax Partner at Bennett Thrasher LLP, provided a comprehensive overview of key considerations for achieving tax efficiency and compliance in commercial real estate.
They highlighted various tax deferral strategies, emphasizing the importance of planning for potential capital gains taxes. Discussions centered on 1031 exchanges and opportunity zone funds, noting the latter’s requirement to hold investments for 10 years to potentially exclude gains. Despite slower adoption than anticipated, opportunity zones remain a viable option for communities needing development, provided investors can navigate the commitment effectively.
Cost segregation and bonus depreciation were also featured as effective deferral strategies. Panelists explored nuanced alternatives such as land lifts and debt finance distributions, which they touted as yielding better returns compared to traditional 1031 exchanges.
A significant tax consideration discussed was the repair regulation analysis, enabling immediate expensing of tenant improvements like second-generation enhancements, a tool underutilized despite its potential tax benefits.
Additionally, pass-through entity tax elections were highlighted as advantageous for real estate investors. The session ended with insights into common tax compliance pitfalls and strategic approaches to income tax planning, underscoring the complexity and importance of thorough tax strategy in real estate investment and management.
Check back for GlobeSt.com for more from the Women of Influence conference.