Ostrow Reisin Berk & Abrams, Ltd.

In December, 2011, the IRS issued temporary regulations intended to set new standards for capitalizing or deducting dollars spent on tangible property. These regulations were originally effective for years beginning on or after January 1, 2012, but the effective date has been postponed to tax years beginning on or after January 1, 2014. Taxpayers have the option to apply the temporary regulations to tax years beginning on or after January 1, 2012.

If you own real estate that generates income, you could be paying an additional 3.8% net investment income tax (NIIT) which goes into effect in 2013. For the sake of discussion, let’s assume that your adjusted gross income (AGI) is over the relevant threshold ($250,000 in the case of a married couple filing jointly). Even if your AGI is generally low, there may come a year when you sell property, giving you a high adjusted gross income and significant income subject to NIIT in that year. Is there any tax planning that can be done to offset the NIIT?

The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) have been working together to develop a new approach to lease accounting. Potential changes to lease accounting have been debated for years and to-date these changes remain undecided:

The Chicagoland rental market continues to thrive and new players are entering the multi-family game every day, either by acquiring rental properties from banks through foreclosure or taking advantage of the low interest rates.

In the midst of these uncertain economic times and pending national elections, we have found that tenants in Chicago have been hesitant about committing to new office leases.

What is the correct accounting method to use when evaluating and managing your real estate venture? There are several methods which can produce significantly different results. If decision making for your business is based on your internal financial statements, make sure you understand which method is being used and what that means to your bottom line.

Many IRS audits are designed to be focused on basic tax issues, but real estate deals can be complicated and confuse the basic facts and key issues of your tax situation. Here are five common tax issues that frequently get audited in the real estate industry:

An initial challenge facing a real estate investor or developer is deciding which type of entity will best meet his/her objectives. While there are numerous entity types available, two “pass-through” entities – an S corporation and an LLC – are popular choices. Although both are “pass-through” entities for tax purposes, there are significant differences that can strongly favor one type over the other.

Most businesses are affected by leases in one way or another, either as a tenant or as a landlord. Lease documents can be long and difficult to read, but paying attention to the small print could make your wallet larger particularly related to common area maintenance charges (CAM).