March 10, 2023
The wide variety of real estate tax opportunities available can be overwhelming. To make sure you’ve considered all potential sources of benefit, review our expansive checklist.
☐ Accelerated Depreciation
- Look-back studies via 3115, best results achieved for properties in service under 15 years
- Recall depreciation potential inherent in 754 Step Ups and 1031 Exchanges, as well as tax-exempt property
☐ Bonus Depreciation
- 100% for properties placed-in-service between 9/28/17-12/31/2022
- Acquired assets eligible under the TCJA
☐ Bonus-Eligible QIP (Qualified Improvement Property)
- QIP placed-in-service on or after 1/1/2018 is 15-year property and bonus-eligible – major implications for renovations/retrofits
☐ Expensing Options under the Tangible Property Regulations (TPRs)
- DeMinimus Safe Harbor (Itemized invoices will be helpful)
- Small Taxpayer Safe Harbor
- Routine Maintenance Safe Harbor (via 3115)
☐ BAR and Materiality Testing (for Expensing Decisions under the TPRs)
☐ Partial Asset Disposition (PAD Election)
- Must be elected in the year the asset was removed from service
- Subject to 280B Demolition Rules
☐ Section 179 Expensing Election
- Overall Expensing Dollar Limitation for TY 2022: $1.08M
- Phase Out Threshold for TY 2022: $2.7M
- Must be taken the year the work is placed-in-service
☐ 1031 Exchange
- Possibility of associated 15% Safe Harbor
☐ EPAct 179D Deduction
- Legacy program still in effect [Inflation Reduction Act (IRA) provisions not in play until TY 2023]
- Maximum deduction of $1.88/SF, partial deductions permitted
- For properties placed-in-service between 2015-2026, ASHRAE Reference Standard is 90.1-2007
- May be claimed retroactively (3115)
☐ Section 45L Credit
- Legacy program still in effect [IRA Provisions not in play until TY 2023]
- $2,000 credit per dwelling unit
- Claiming the credit results in a mandatory basis deduction and corresponding decrease in subsequent LIHTC Credit
☐ ITC (Solar Investment Tax Credit)
- Rate determined by when “construction commenced” – 26% in 2021, 30% in 2022
☐ LIHTC (Low-Income Housing Tax Credit)
- 4% credit (30% subsidy) for acquisitions, rehabs
- 9% credit (70% subsidy) generally for new construction and major rehabs without additional federal subsidies
☐ HTC (Historic Tax Credit)
- Rehabilitation of historic buildings — 20% of qualified rehab costs may be deducted
☐ State-Specific Incentives
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The wide variety of real estate tax opportunities available can be overwhelming. To make sure you’ve considered all potential sources of benefit, review our expansive checklist.
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