Anchin’s comprehensive suite of specialty advisory services provides business owners with on-demand resources to grow a more efficient, resilient and profitable operation. While many clients already rely on us for tax and compliance work, our broad business expertise can add value to every aspect of your real estate business to improve processes and your bottom line, while establishing a strong foundation for long-term success. From restructuring real estate transactions to developing strategic plans to maximize stakeholder value and providing guidance on estate and succession planning, Anchin’s Real Estate group has been unwavering in our dedication to providing specialized services that are uniquely tailored to the real estate industry.
The tax impacts of debt: What owners and investors should know
Leverage is an important instrument for real estate owners and investors. Utilizing leverage appropriately can help enhance returns, build a diversified portfolio, strategically enter the market, and provide tax benefits. As the capital markets have become increasingly challenging, many lenders are requiring guarantees by the mortgagors. The use of a guarantee can drive surprising tax results. This article will concentrate on how mortgage debt affects the tax basis of acquired property, as well as the investment basis of real estate owners and investors in partnerships (note that real property held in different types of entities may yield varied outcomes).
Interest expense is going up. Your taxes might be too.
The rising interest rates will directly affect real estate businesses operating across all asset classes. The ability to deduct interest expense for tax purposes has helped to alleviate some of the tax burden for business owners. However, the Tax Cuts and Jobs Act of 2017 (“TCJA”) imposed limitations on the deductibility of interest expense for certain taxpayers. For tax years beginning on or after January 1, 2022, some of the adjustments that increased the allowable deduction of interest expense for certain taxpayers have sunset. Accordingly, the sun-setting of these provisions may result in significant increases in taxable income for leveraged businesses subject to these rules. Understanding how the changes to the rules may impact your business now will enable you to properly manage your business’s cash flow and avoid any tax surprises next April.
Anchin
Anchin has deep experience working alongside real estate firms and developers of all sizes including many top Real Estate organizations in the industry. Our Real Estate Group advises a broad range of clients including real estate owners, developers, fund managers, agents/brokers and property managers. Our clients operate across all real estate asset classes including commercial, residential (multifamily), industrial and hospitality.