I was recently asked to be a featured guest on Commercial Real Estate Pro Network (CREPN) with J. Darrin Gross.
Gross is a commercial real estate insurance expert and real estate investor with over 25 years of experience in the property management, multifamily, single family rental, and commercial insurance industry – specializing in real estate investors coverage needs.
Throughout our 90-minute conversation, we discussed the introduction of the tangible property regulations, or the “repair regs,” as one of the most fundamental tax law changes since the 1986 Code went into effect. Many practitioners have gone through a crash course of information overload trying to comprehend the new capitalization standards, determine what are materials and supplies, etc.
Here are some of the topics we covered:
- History of the IRS Repair Regulations: The ruling stems from a 2003 Federal Court case FEDEX vs IRS in which FEDEX argued the engines were not a Unit of Property (UoP). The repairs were incidental and necessary expense.
- How much can be expensed for routine maintenance?
- The current safe harbor limit is $2,500 for routine maintenance
- What is a Unit of Property?
- What are Capitalization Standards?
- The “give-back,” Partial Asset Disposals: The new regulations allow for expensing of a system asset that has not been fully depreciated in the year of replacement and recapitalization.
- DeMinimis Expensing Safe Harbor Election
- Routine Maintenance Safe Harbor
- Small Taxpayer with Building Safe Harbor Election
- Determine Unit of Property (UoP)
- Apply Capitalization Standards
- Book Conformity Election
Be sure to listen to this episode and reach out to me with any questions you may have.
Meet the Author
Tax Manager - Real Estate
Jonathan McGuire, CPA
Aldrich CPAs + Advisors
Jonathan McGuire has over eight years of experience providing strategic tax planning and compliance expertise to private middle-market clients. He has a deep focus as a real estate accountant, working with investors, developers, realtors, property managers, and other professional service providers in real estate. He works with a wide range of property types ranging from…
- Real estate
- Partnership taxation
- Tax planning and compliance
- Certified Public Accountant
- Repair regulations
- Qualified Opportunity Zones
- Qualified Opportunity Funds