4D — December 23, 2022 - January 19, 2023 — Year in Review 2022 — M id A tlantic Real Estate Journal
www.MAREJ.com
Y ear in R eview 2022
CRESDA pioneering a diverse CRE industry
By Robert Rahner, Cost Recovery Solutions LLC Bonus Depreciation: Going, Going, Soon-To-Be Gone business or other income pro- ducing activity.
their ongoing tenure at New- mark Associates, the largest and longest established women owned commercial real estate brokerage firm in NJ, Glick and Newmark recognized that corporations’ supplier diver- sity programs, while popular, only went so far in creat- ing opportunities for diverse commercial real estate firms. CRESDA provides a solution by simplifying the process of procuring vetted and certified diverse real estate providers on a national scale. The busi- ness model is unique. Not only does it provide a resource for large corporations look- ing to promote their supply chain diversity with reliable firms, but also empowers di - verse business owners through its member base of certified woman, minority, veteran, and LGBTQ+ owned commercial real estate firms. CRESDA’s member firms are highly accredited and capable. CRESDA provides the added benefit of increased visibility in connecting them with large, national-scale op- portunities. “I am a big fan of CRESDA,” shared Joan Brothers , founder and CEO of Manhattan Boutique Real Estate , a woman-owned real estate firm in New York City. “As a woman-owned business (WBE), I enjoy work- ing with like-minded, mission- driven companies. We share market trends and support each other. To date, I have submitted three RFPs with CRESDA in partnership with one of the largest commercial real estate firms in the U.S.” CRESDA aims to bring oppor- tunities to each of its members in 2023 and continue foster- ing the community to which Brothers speaks. As more corporations grow aware of CRESDA’s value, the firm grows that much closer to fulfilling on its mis - sion of a more diverse com- mercial real estate industry, thereby strengthening di- verse communities nation- wide. CRESDA invites corpo- rations to join in pioneering a more diverse and inclusive landscape as it continues to blaze a path for change in the real estate industry. CRESDA LLC is a national alliance of certified minority, women, and veteran-owned commercial real estate firms on a mission to diversify the supply chains of Fortune 500 compa- nies. We provide a range of com- mercial real estate brokerage and consulting services. MAREJ
FLORHAM PARK, NJ — CRESDA, Commercial Real Estate Supplier Di-
I
n the world of cost segrega- tion, 100% bonus deprecia- tion has been the “cherry
as bonus depreciation rates fall 20% over each of the next five years. As you can see, the longer an investor waits to take ad- vantage of bonus depreciation, the more their bottom line can be affected. Other Options While bonus depreciation is a powerful tool to consider, it may not always be the best tax strategy depending on an investor’s specific purchase and investment goals. Other op- tions to consider include using Section 179 expensing, putting off claiming the deduction to later years or not taking it at all if planning to sell the prop- erty soon (to avoid paying tax- able “recapture” depreciation). We advise consulting with your tax advisor to determine the best strategy for your situation. The Bottom Line Whether or not you use bonus depreciation, IRS- approved cost segregation studies can help improve your cash flow and return on investment by reallocating building assets to shorter de- preciation schedules. Time is ticking to benefit from the full 100% bonus, so it’s advanta- geous to consider making ma- jor or real property purchases eligible for bonus depreciation and putting them into service before year end to maximize your tax savings options. Cost Recovery Solutions LLC works with commercial proper- ty owners and their tax profes- sionals to deliver value-added acquisition services that boost their return on investment. Services include cost segrega- tion studies, energy tax services and tangible asset apprais- als/reviews. Learn more by contacting us at 732.548.3855. Robert Rahner, CFA, ASA, CCSP, is the managing di- rector of Cost Recovery Solutions LLC. MAREJ
versity Alli- ance , is blaz- ing a trail of change in the commercial real estate industry and is only just getting start- ed. Founded
• Is expected to last more than a year, with a useful life of 20 years or less (ex- amples include computer systems, certain vehicles, machinery, equipment, and office furniture). • Is new or, if used, was not used by the taxpayer or a pre- decessor before acquiring it, acquired from a related party or acquired as part of a tax-free transaction. Investors and Qualified Improvement Property (QIP) For real estate investors, most interior improvements made to nonresidential prop- erty (excluding structural framework/building expansion, escalators or elevators) can qualify for bonus depreciation. The CARES Act of 2020 retro- actively corrected a drafting error made in the TCJA that originally excluded QIP, so now this can be claimed for property put into service in 2018, 2019 or 2020 as well. How CRS Can Help Determining which assets a real estate investor owns that can qualify for bonus de- preciation is tricky. Buildings themselves do not, but cost segregation studies performed by experienced CRS engineers: • Identify parts of commer - cial real estate properties that can actually be considered tan- gible personal property. • Reallocate those assets to shorter depreciation schedules. • Determine which interior building upgrades can qualify as QIP. We can also calculate the tax savings you can gain (or lose) based on the year that you put a specific property into service. The table below demonstrates the diminish- ing tax saving benefits avail - able for a $1M investment
on top” tax tool from which many commercial property in- vestors have been able to consistently benefit since the passage
Nancy Glick
in 2021, CRESDA provides tai- lored solutions for fortune 500 and other large corporations seeking more diverse real es- tate service suppliers. In turn, the firm creates opportunities for its member base of quali- fied and certified diverse (mi - nority, woman, veteran, and LGBTQ+ owned) commercial real estate brokerage firms na - tionwide. CRESDA’s mission is clear: to advance diversity in the real estate industry and bring resources back to the diverse communities it serves. Having dedicated its first year to laying a founda - tion for change, CRESDA is poised to create real impact and forge new opportunities in the industry in 2023. CRESDA has experienced steady growth over the past year, introducing its offerings and mission to key stake hold- ers and growing its member base to include representation in over 10 states. “Over the past year, we’ve announced ourselves to the real estate world. We’ve had champions that appreciate not only the value we add to their supplier diversity efforts but also the importance of our mission,” shared CRESDA cofounder, Nancy Glick . “These firms have been willing to join us in pioneering a more diverse industry. With these partners, with the deals we have in place for the new year, we see the impact we’ve been working towards start to come to frui- tion.” During the past month, CRESDA was awarded its largest deal to date of approxi- mately a quarter of a million s/f for a top five global technol - ogy company in partnership with a top global commercial real estate firm. In addition, CRESDA will enter 2023 with ongoing RFPs spanning multi- ple states. “We’re very pleased with our growth prospects for the coming year,” added Glick. Glick and fellow cofounder Susanne Newmark created CRESDA out of a need they observed for better access to diverse real estate service providers nationwide. During
Robert Rahner
of the Tax Cuts and Jobs Act (TCJA) in 2017. However, starting in 2023, the benefit that effectively allows owners to expense the full cost of quali- fying capital assets in the year they were acquired (instead of in smaller amounts over the life of the property), is going to start fading to black over the next five years. Background on “Bonus” The concept of bonus depre- ciation was born in 2002 with the Job Creation and Worker Assistance Act, which was enacted to provide tax relief and incentives for companies to expand and create jobs by investing in new plants and equipment. Aside from a brief period at 100% in 2010 - 2011, the amount of bonus allowed typically ranged between 30% – 50% through subsequent acts targeted to keep the economy moving forward and spur new growth over the years. The TCJA expanded the benefit back up to 100% and allowed it to be taken on acquisitions in- stead of just new construction. It also extended the timeframe to include qualified assets placed into service between September 27, 2017 and Janu- ary 1, 2023. Once the pandemic hit, using bonus depreciation was an effective tool for inves- tors hit hard by the economic standstill to feel more confident in continuing to make invest- ments in their properties. However, unless Congress extends the incentive once again (which doesn’t sound likely), the bonus amount will start reducing next year by 20% annually until it complete- ly expires by 2027. This means that the sooner an investor plans on purchasing property that qualifies for bonus depre - ciation, the better! So What Qualifies for Bonus? Generally, the rules for tak- ing bonus depreciation include property that meets the follow- ing criteria: • Is acquired for use in a
Made with FlippingBook - Online magazine maker