6A — April 10 - 23, 2020 — COVID-19 & The CRE Industry — M id A tlantic Real Estate Journal
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COVID-19 & T he CRE I ndustry
n March 27, 2020, the United States Con- gress passed the Coro- By Alicia Mynarska, Withum Impact of the Key Business Provisions of Coronavirus Aid, Relief, &Economic Security Act on the Real Estate Industry O
The CARES Act allows tax- payers to reduce their income taxes by claiming 100% bonus depreciation for “qualified improvement property” (QIP), which includes any improve- ment made by the taxpayer to an interior portion of a non- residential building, if such improvement is placed in ser- vice after the date such build- ing was first placed in service. Excluded from this, however, is anything related to the in- ternal structural framework of the building, elevators or escalators, or the enlargement of the building. Section 2307 of the CARES Act resolves a technical draft- ing error in the Tax Cuts and Jobs Act of 2017 (TCJA) by classifying QIP as 15-year will be able to share contact information, their organiza- tion’s circumstances, and their specific needs. From there, SIOR members within the ap- propriate geographical region will be quickly notified of the request and will be able to provide advice, contacts, or if applicable, direct the person to a property owner(s) who can help accommodate the group’s needs. Through CARE, an or- ganization searching for a com- mercial real estate space can quickly get up and running, helping their neighbors in a matter of days or even hours. Independent of the CARE program, SIORs across the globe are being called upon to make contact with nonprofit groups in their neighborhoods to see how they can assist - a responsibility that SIOR has assumed since it’s inception. “SIOR has a history of step- ping up in times of crisis,” says SIOR Global president Mark Duclos . “Our organization was founded duringWorldWar II with the goal of assisting the United States Government in fulfilling critical space needs. Today, we are in a new global crisis, one that calls upon all of us to do our part. SIORs are the best at what we do and there has never been a more important time to use our knowledge, resources, and network to help our nation get
property, therefore making it bonus-eligible. Under TCJA, QIP was not afforded a 15- year life. Since only property with a 20-year life or less is bonus eligible, QIP placed in service on or after January 1, 2018 did not qualify for bonus depreciation and was required to be depreciated over 39 years. Similarly, the depreciable life of QIP has changed for businesses using the Alter- native Depreciation System (ADS) from 40 years under TCJA to 20 years under the CARES Act. Unfortunately, QIP is currently not eligible for bonus depreciation under ADS. Businesses that made an irrevocable election out of Section 163(j) business inter- est expense limitation because through this together.” Duclos himself has been in contact with a food bank in the Hartford, CT region that serves multiple counties. The food bank’s manager was struggling to find people to distribute goods and to help overcome the problem, she was considering setting upmultiple drop spots where residents could pick up their food. But to do this, warehouse spaces around the region would need to be found and contacted. After Mark shared what SIOR does and what he could do to help, the manager was thrilled to have someone offer support for a problem that would have been extremely difficult to overcome without extensive contacts in local commercial real estate. Stories like this are why the CARE program has been created. SIOR is committed to providing this critical assis- tance, so that going forward, nonprofits will be able to ef - ficiently serve those who need help the most. “We all have an obligation to reach out in the commu- nity, identify where and how we can facilitate support, and rally together to share ideas,” adds Duclos. “This is our call to duty and chance to step up to demonstrate why SIORs are leaders in the industry and in their communities, and do our
QIP was previously ineligible for bonus depreciation now find themselves locked out of the new QIP bonus deprecia- tion rules unless retroactive relief is offered by Congress. For the moment, these busi- nesses may be able to amend their 2018 tax returns or file a Form 3115 with their 2019 tax returns to catch up the ADS depreciation on the previous 40-year QIP which is now 20- year QIP. New rules for business interest expense limitation For years 2019 and 2020, the CARES Act increases the business interest expense limi- tation from 30% to 50% of “ad- justed taxable income” (ATI), except for partnerships which are still subject to the 30% ATI NUTLEY, NJ — Prism Capital Partners delivered a stockpile of critical safety gear – discovered in a former envi- ronmental control facility store- room at its ON3 campus – to Hackensack Meridian Health’s Hackensack University Medical Center. The donation included more than 400 DuPont Tyvek Bacteria suits; more than 500 Kimtec bacterial masks; and in excess of 1,000 personal hygiene kits each containing four masks, latex gloves, a disposable thermometer, hand sanitizer and sterile wipes. ON3 is the former Hoffmann- La Roche North American head- quarters campus, which housed biologic research facilities among other operations. “When Roche sold us the campus, they left lots of things behind – from artwork, to building materials to biologic research supplies,” said Prism’s Eugene Diaz , principal partner. “When we realized the abundance of the part!” If a community support group like those outlined above is in need of help, advice, or contacts that can provide assistance in locating an ap- propriate commercial space, they are encouraged to visit the CARE website today. The Society of Industrial
limitation for 2019. However, partners will have the ability to treat 50% of any 2019 excess business interest expense as “paid or accrued” in 2020, ef- fectively releasing in 2020 50% of the interest suspended in 2019, while the other 50% will remain suspended under the general rules. When computing 2020 limitations, taxpayers can elect to choose between 2019 or 2020 adjusted taxable income. This offers tax planning oppor- tunities, since many businesses may experience reduced tax- able income in 2020. As always, if you have any questions regarding the new law, please contact your With- um representative. AliciaMynarska is a senior manager at Withum. and Office Realtors is a lead - ing society for industrial and office real estate professionals. Individuals who earn their SIOR designation adhere to the highest levels of account- ability and ethical standards. Only the industry’s top profes - sionals qualify for the SIOR designation. protective gear in our posses- sion, we quickly determined that the best way to make good use of these items was to give them to the medical community at a time when supplies are so desperately needed and in short supply. We hope that other similarly situated research properties and companies can do the same thing.” ON3 is home to the Hacken - sack Meridian Health Center for Discovery and Innovation, which this month developed a rapid response diagnostic test for COVID-19. “We are proud that ON3’s growing bio ecosystem is contributing to healthcare advancements at a time when our nation – and globe – needs this type of inno- vationmore than any other time in recent history,” Diaz added. Prism transported the gear to the loading dock of Hackensack University Medical Center, in adherence with all appropriate restrictions and precautions.
n a v i r u s Aid, Relief, a n d E c o - nomic Se- curity Act ( C A R E S Act). While the CARES Act reflects u n p r e c -
Alicia Mynarska
edented broad support to all sectors of the economy, it includes business provisions that provide significant bene - fits to the real estate industry. 100% bonus depreciation for “qualified improvement property” by fixing a draft - ing error in the 2017 Tax Cut and Jobs Act (TCJA)
A S H I N G T O N , DC — The Soci - ety of Industrial CARE programwill help nonprofits in need of operations & local outreach support facilities SIOR introduces initiative to provide critical community support during Covid-19 crisis W
and Office Rea l tor s ( S I O R ) , one of the world’s pre - mier orga- n i z a t i ons f o r o f f i c e and indus- trial real es-
Prismdonates stockpile of critical safety gear to Hackensack Meridian Health
Mark Duclos
tate professionals, is stepping up to support communities na- tionwide during the COVID-19 crisis. SIOR is announcing the Community Assistance and Relief in Emergencies (CARE) program to provide immedi- ate support for nonprofit and philanthropic services across the country. Many organiza- tions such as food banks, shelters, school food distribu- tion centers, and emergency medical organizations, require additional space to operate and meet the needs of their communities. As experts in commercial real estate with unmatched connections lo- cally, regionally and across the country, SIORs are uniquely positioned to quickly find the space that these groups des- perately need. Through the CARE pro- gram, a nonprofit will be able to quickly engage with SIOR via a newly launched webpage: SIOR.COM/CARE. The user
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