Landlords must act quickly if they want to turn federal government relief into much-needed cash flow for their retail properties, experts said on an ICSC webinar called Turning CARES Act Tax Relief into Cash. New provisions of the Coronavirus Aid, Relief, and Economic Security Act allow commercial property owners opportunities to cut their tax burdens for 2019 and even get tax refunds for past years, said David Deshotels, executive vice president of Cost Segregation Services Inc. “There is cash hidden in the walls of these properties. Make the regulations work for you.”
One way to access that cash is by deducting past net operating losses under new rules, said Adam Hill, real estate advisory partner in Cohen & Co. For example, a retail property owner that bought a building or added to one in 2019 or 2020; that demolished and renovated interiors in 2018, 2019 or 2020; or that made interior improvements or leasehold improvements to properties dating back to 2018 might be eligible for deductions. Cost segregation also could increase deductions for properties that have been in service for 15 years, he added.
Cost segregation — which involves identifying various building components for proper, shorter depreciation — is a survival strategy for some firms that need cash to fund operations. “This is an interest-free loan,” Deshotels said. “You don’t have to pay it off until you sell the property. It’s recaptured when you sell the building.”
Normally, a taxpayer has only until one year after the close of a taxable year to file for a net-operating-loss carryback. but the IRS has extended this period for 2018 returns until June 30. Another provision of the CARES Act provides partnerships the opportunity to file amended Form 1065s and K-1s for tax years 2018 and 2019 by Sept. 30.
The webinar is available here (Chrome works best).
Click to read about and listen to other recent webinars from ICSC
Stores are the best way to reach the fast-growing cannabis retail market
10 communication tips to prepare for reopening
Which tech tools are best for remote work?
Next steps for job seekers
Smart restaurants are prepping for new normal
Transparency key to leadership in a crisis
How to ask a lender for relief
Government loans that can help small businesses during COVID-19
Communications are key for retail centers’ pandemic response
By Brannon Boswell
Executive Editor, Commerce + Communities Today
