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Presented by: Michael F. D’Onofrio
Specialty Tax Strategy & CARES Act Updates
Top 5 Real Estate Pro Tips!
1. Cost Segregat...
Michael F. D’Onofrio is Managing Director of Engineered Tax Services (ETS)
the country’s largest specialty tax engineering...
Top 5 Real Estate Pro Tips!
Cost Seg & Bonus Depreciation
Improvements & Dispositions
Energy Tax Credits
Construction Tax ...
Federal COVID-19 Acts to Date
• Coronavirus Preparedness & Response Supplemental Appropriations Act (March 4)
– $8.3 billi...
Tax Provisions of CARES Act
• Business Provisions
– Employee retention tax credit: Refundable payroll tax
credit for 50% o...
Tax Provisions of CARES Act
• IRS Extended tax filing relief to July 15
• 2019 tax returns with no interest or penalties
•...
Small Business Loans
• $670 billion ($349 billion + $321 billion) for loans to small
businesses (with 500 or fewer employe...
Federal Reserve Loans
• Federal Reserve established Main Street Lending Program
• Two facilities: Main Street New Loan Fac...
Future Stimulus & Legislative Outlook?
• COVID-19 4.0 “Infrastructure” Package on agenda now…
• May 12 House Democrats rel...
Presented by: Michael F. D’Onofrio
PRO TIP #1
Cost Segregation & 100%
Bonus Depreciation
New Depreciation Rules
100% Bonus Depreciation
Section 179 Expensing Rules
✓ Cost Segregation identifies and accelerates
d...
What is Cost Seg?
Cost Segregation Study methodically reviews all property
assets to properly identify and reclassify:
Rea...
Next Generation
Cost Segregation Studies
TIMING ILLUSTRATION
Presented by: Michael F. D’Onofrio
PRO TIP #2
Maximize Improvements
Renovations & Value-Add
Capturing Dispositions
What Are Dispositions?
Capturing Tax Value of a Removed Building
Asset Creates an Immediate Tax Deduction!
Typically exist...
Presented by: Michael F. D’Onofrio
PRO TIP #3
Capture All Energy
Tax Incentives & Credits
Federal - State - Local Utility
Energy Tax Credits
PASSED:
2019 Extender Bill
179D & 45L
Energy Tax Credits
Retroactive for all new
construction and renov...
179D Energy Tax Deductions
What is 179D?
• Incentivize Energy Efficient Green Building
• New Construction or Renovations
•...
45L Energy Tax Credit
What is 45L?
• Incentivize Energy Efficient Green Building
• New Construction or Renovations
• Resid...
Presented by: Michael F. D’Onofrio
PRO TIP #4
Generate Addition Immediate
Revenue Through the Roof!
5G Technology Rollout
5G Rooftop $ Leases
Generate Revenue Through the Roof!
- We have expertise helping clients with cell tower and leasing roo...
Presented by: Michael F. D’Onofrio
PRO TIP #5
Understand Strategies in
New “CARES Act”
COVID-19 Stimulus Plan of 3/2020
Presented by: Michael F. D’Onofrio
ADVANCED TAX STRATEGIES
- Maximize Capital Stack
- Defer, Reduce, Eliminate
(Opportunit...
Find, Capture and Stack Incentives!
Opportunity Zone
Strategies in Many States
Opportunity Zone Snapshot
Investor Sells Stock or
Has A Capital Gain
Investor Places Gains into
Qualified Opportunity Fund...
Tax Exchange Alternative Investment
Solar Project Investments:
$250 Million+ Tax Credits Available Now
➢Immediate 2020 Fed...
Presented by: Michael F. D’Onofrio
For Additional Information Contact:
Michael F. D’Onofrio | Managing Director
MDonofrio@...
Get More Now: New Tax Credit & Incremental Ancillary Income Opportunities Workshop
Get More Now: New Tax Credit & Incremental Ancillary Income Opportunities Workshop
Get More Now: New Tax Credit & Incremental Ancillary Income Opportunities Workshop
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Get More Now: New Tax Credit & Incremental Ancillary Income Opportunities Workshop

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Content:

- Get the “Masterclass Playbook” on implementing enhanced Stimulus Plan offerings now
- Learn how to maximize bonus depreciation, NOL carryback, immediate refunds and cash flow generator
- Discover how you can monetize your apartment property rooftops with the 5G cell site installations

Presenter:

- Michael D’Onofrio, Managing Director, Engineered Tax Services

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Get More Now: New Tax Credit & Incremental Ancillary Income Opportunities Workshop

  1. 1. Presented by: Michael F. D’Onofrio Specialty Tax Strategy & CARES Act Updates Top 5 Real Estate Pro Tips! 1. Cost Segregation & Bonus Depreciation 2. Improvements & Disposition Credits 3. Energy Tax Credits & Incentives (179D/45L) 4. 5G Technology & Revenue Through the Roof! 5. Advanced Tax Exchange Strategies (Opportunity Zones, Historic, Energy Tax Credit Investing)
  2. 2. Michael F. D’Onofrio is Managing Director of Engineered Tax Services (ETS) the country’s largest specialty tax engineering firm focused on wealth preservation, tax mitigation and tax credits utilizing IRS-approved strategies and an innovative, comprehensive approach with Cost Segregation, Renewable Energy Tax Incentives, Historic Tax Credits and new Opportunity Zones for companies and property owners to help maximize all Federal, State and Local incentives, credits, rebates available. Michael lives in Charlotte, NC and works nationally delivering specialized engineering tax studies to local and national companies, investment firms, family offices and private equity investors. ETS has a team of over 100+ professionals in 20 offices nationally with HQ in West Palm Beach, Florida. Your Presenter – Engineering & Specialty Tax Credit Expertise Michael F. D’Onofrio | Managing Director MDonofrio@EngineeredTaxServices.com Direct: 561-762-0044 www.EngineeredTaxServices.com
  3. 3. Top 5 Real Estate Pro Tips! Cost Seg & Bonus Depreciation Improvements & Dispositions Energy Tax Credits Construction Tax Planning Opportunity Zone & Tax Exchange
  4. 4. Federal COVID-19 Acts to Date • Coronavirus Preparedness & Response Supplemental Appropriations Act (March 4) – $8.3 billion emergency funding related to developing a vaccine, medical supplies, grants for public health agencies, etc. • Families First Coronavirus Response Act (March 18) – $192 billion Free coronavirus testing, paid leave, enhanced unemployment insurance, expanded food security initiatives, etc. • Coronavirus Aid, Relief, and Economic Security Act “CARES Act” (March 26) – $1.8 trillion Added tax provisions, small business loans, mortgage forbearance, etc. • Paycheck Protection Program and Health Care Enhancement Act (April 24) – $483 billion Increased Paycheck Protection Program authority, disaster loan funding and added funds for health care response
  5. 5. Tax Provisions of CARES Act • Business Provisions – Employee retention tax credit: Refundable payroll tax credit for 50% of wages (up to $10,000) paid by employers to employees during crisis. – Employer Payroll Tax Deferral: Delay of payment of employer payroll taxes from enactment to 12/31/20 – Net Operating Loss (NOL) relief: 5-year carryback • Individual Tax Assistance – Recovery Rebates: $1,200 (single filers); $2,400 (married couples); and $500 (per child). Phases out for single filers earning over $75,000 and married couples earning over $150,000.
  6. 6. Tax Provisions of CARES Act • IRS Extended tax filing relief to July 15 • 2019 tax returns with no interest or penalties • First and second quarter estimated payments • 1031 Like-Kind Exchanges (for deadlines between April 1 and July 15) • NMHC seeking additional relief • Opportunity Zone investments (for deadlines between April 1 and July 15) Most Important for Real Estate… New - Increased Loss Limitations -Ability to use more tax losses / NOLs now! New – 5yr Loss Carry Back Provision Ability to go back 5yrs in tax returns and possibly generate immediate tax $ refunds!
  7. 7. Small Business Loans • $670 billion ($349 billion + $321 billion) for loans to small businesses (with 500 or fewer employees, full-time/part-time) – Up to 250% of average monthly payroll, maximum $10,000,000 – Loan is forgivable if: • Employer keeps employees on payroll • Over 8 weeks spends loan on payroll, rent, mortgages, utility payments – Effective immediately through SBA lenders – No fees, qualifying requires no collateral, no personal guarantee and borrower certifies they are impacted by COVID-19 – Retroactive to 2/15/20 – $10 billion for emergency grants up to $10,000 • NMHC is urging Treasury / SBA to clarify that all multifamily businesses with 500 or fewer employees qualify. • SBA guidance is extremely unclear with respect to qualification. • SBA can address this issue administratively, but NMHC is also asking Congress to act should SBA not do so.
  8. 8. Federal Reserve Loans • Federal Reserve established Main Street Lending Program • Two facilities: Main Street New Loan Facility (MSNLF) Main Street Expanded Loan Facility (MSELF) • Goal to assist small and medium-sized businesses with $600 billion in loans. • Available to businesses with 10,000 or fewer employees or 2019 revenue of $2.5 billion or less. • Minimum loan of $1 million. • Loan limit lesser of $25 million or 4 times EBITDA when added to existing but undrawn debt (MSNLF); and $150 million, 30 percent of existing but undrawn debt, or 6 times EBITDA (MSELF). • Loans have 4-year maturity with principal and interest deferred for one year.
  9. 9. Future Stimulus & Legislative Outlook? • COVID-19 4.0 “Infrastructure” Package on agenda now… • May 12 House Democrats released massive stimulus proposal dubbed Health and Economic Recovery Omnibus Emergency Solutions Act or HEROES Act for short. • Proposal massive not only in its estimated $3 trillion cost but also in its size, with more than 1,800 pages included in the bill. • Provisions calling for another round of stimulus payments, extended unemployment benefits and other direct financial assistance. • HEROES Act would eliminate the limitation on itemized deductions for state and local taxes (SALT) for the 2020 and 2021 tax years. – interesting provision revisits hard-fought issue for many high-tax states May take longer to move bill with debates on state aid and deficit impact
  10. 10. Presented by: Michael F. D’Onofrio PRO TIP #1 Cost Segregation & 100% Bonus Depreciation
  11. 11. New Depreciation Rules 100% Bonus Depreciation Section 179 Expensing Rules ✓ Cost Segregation identifies and accelerates depreciation on 5-year and 15-year personal property and what qualifies for Bonus ✓ Bonus Depreciation increased to 100% also applies to Purchases of Existing Buildings in addition to new construction and improvements ✓ Section 179 Expanded ability to expense immediately up to $1 Million also including new Roofs, HVAC, Security Systems
  12. 12. What is Cost Seg? Cost Segregation Study methodically reviews all property assets to properly identify and reclassify: Real Property (depreciated over 27.5 or 39 years) Personal Property (depreciated over 5 or 15 years) - All Personal Property assets now also qualifies for new 100% Bonus Deprecation! How is this done? Yes, the IRS allows it! • Invoices, Drawings, Blueprints reviewed and site visit conducted to analyze building as part of detailed Engineering-based Cost Segregation Study • Can also go back Retroactively 5-10+ years! • Don’t forget Improvements and Dispositions! • Generally Requires the filing Form 3115 is easy
  13. 13. Next Generation Cost Segregation Studies
  14. 14. TIMING ILLUSTRATION
  15. 15. Presented by: Michael F. D’Onofrio PRO TIP #2 Maximize Improvements Renovations & Value-Add Capturing Dispositions
  16. 16. What Are Dispositions? Capturing Tax Value of a Removed Building Asset Creates an Immediate Tax Deduction! Typically existing improvements (Lights, HVAC, Roof, Windows, etc) remain on long-term 27.5 or 39-year depreciation schedule and available for Immediate Tax Write-Off! CPAs call it (PAD) Partial Asset Disposition ETS maximizes Improvements with a Cost Seg Study by capturing any Abandonment and Dispositions for serious increased cash benefits and Enhanced ROI!
  17. 17. Presented by: Michael F. D’Onofrio PRO TIP #3 Capture All Energy Tax Incentives & Credits Federal - State - Local Utility
  18. 18. Energy Tax Credits PASSED: 2019 Extender Bill 179D & 45L Energy Tax Credits Retroactive for all new construction and renovations completed 2018, 2019, 2020!
  19. 19. 179D Energy Tax Deductions What is 179D? • Incentivize Energy Efficient Green Building • New Construction or Renovations • All Commercial, Retail, Industrial Properties • Residential and Multifamily 4+ Stories • Up to $1.80 per sf Bonus Tax Deduction • For new Lighting, HVAC, Roof, Windows • Placed in Service Dates: 2006 – 2020
  20. 20. 45L Energy Tax Credit What is 45L? • Incentivize Energy Efficient Green Building • New Construction or Renovations • Residential and Multifamily 3 Stories and Less • $2,000 Tax Credit per unit • For new Lighting, HVAC, Roof, Windows • Placed in Service Dates: 2006 – 2020
  21. 21. Presented by: Michael F. D’Onofrio PRO TIP #4 Generate Addition Immediate Revenue Through the Roof! 5G Technology Rollout
  22. 22. 5G Rooftop $ Leases Generate Revenue Through the Roof! - We have expertise helping clients with cell tower and leasing rooftops for new 5G Wireless Technology as major national companies expanding aggressively right now. - Works for many building types including multifamily apartments, office, retail, storage, warehouse, manufacturing, distribution, hotels, resorts, senior living, single family developments, condo HOAs, government, state, city, municipal, schools, hospitals, churches, etc. - Leases are typically 15-20+ years in length and many can be paid upfront in a lump sum payment. Examples of Recent Success: -$750,000+ for Condo HOA in Palm Beach -$1.2 Million+ for Multifamily complex in Atlanta -$6.7 Million+ for Self-Storage property portfolio -$500,000+ for Hotel property in Charlotte - Initial review is at No Cost to you, we just share % of the net cash revenue you receive going forward. - Just need address, building and site description to begin the process.
  23. 23. Presented by: Michael F. D’Onofrio PRO TIP #5 Understand Strategies in New “CARES Act” COVID-19 Stimulus Plan of 3/2020
  24. 24. Presented by: Michael F. D’Onofrio ADVANCED TAX STRATEGIES - Maximize Capital Stack - Defer, Reduce, Eliminate (Opportunity Zones & 1031 Exchanges) - Tax Credit Investing (Solar, Historic, OZ)
  25. 25. Find, Capture and Stack Incentives!
  26. 26. Opportunity Zone Strategies in Many States
  27. 27. Opportunity Zone Snapshot Investor Sells Stock or Has A Capital Gain Investor Places Gains into Qualified Opportunity Fund (QOF) within 180 Days QOF Buys Real Estate or Business in Qualified Opportunity Zone QOF Invests $ Matching Purchase Price (-land) into Property Development Hold 10 Years Pay No Capital Gains on Acquired Property or Business Appreciation Taxes on Original Capital Gains Due: Dec. 31, 2026 or Upon Sale Hold 7 Years for 15% basis increase (pay taxes on 85% of capital gains) Hold 5 Years for 10% basis increase (pay taxes on 90% of capital gains) Sources: Marcus & Millichap Research Services
  28. 28. Tax Exchange Alternative Investment Solar Project Investments: $250 Million+ Tax Credits Available Now ➢Immediate 2020 Federal Investment Tax Credit (ITC) of 26% + 100% Bonus Depreciation in current year + Cash Flow for 6 years ➢20%+ annual IRR with ~70% of original investment returned with tax savings in next quarterly or annual filing with tax credits + depreciation + possible state and local cash rebates ➢CARES ACT Impact: ➢1 year Look back on Tax Credits! ➢5 year Lookback on Depreciation! ➢Buying Solar Power Plant in 2020 allows use of the Depreciation immediately and potentially Going Back 5 Years and recover Taxes Paid. ➢2015, 2016, 2017, 2018 and 2019 Taxes Paid can be recovered through Amended Returns.
  29. 29. Presented by: Michael F. D’Onofrio For Additional Information Contact: Michael F. D’Onofrio | Managing Director MDonofrio@EngineeredTaxServices.com Direct: 561-762-0044 www.EngineeredTaxServices.com

Content: - Get the “Masterclass Playbook” on implementing enhanced Stimulus Plan offerings now - Learn how to maximize bonus depreciation, NOL carryback, immediate refunds and cash flow generator - Discover how you can monetize your apartment property rooftops with the 5G cell site installations Presenter: - Michael D’Onofrio, Managing Director, Engineered Tax Services

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