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Accounting 2013

Accounting 2013

Eight is Enough: The Revised Repair Regulations

IRS

In September, the Internal Revenue Service issued its updated property repair regulations manual, which modifies the temporary regulations issued at the end of 2011.

The regulations were revised to account for some misunderstandings inherent in the original revision, which was originally planned to roll out in January of this year. Known formally by its unwieldy title “Guidance Read More

Accounting 2013

Exempt: Real Estate Pros and the So-Called Medicare Tax

Rubber-Stamp

Somewhat lost in the welter of caterwauling and chaos surrounding the Affordable Care Act rollout was a 3.8 percent tax on certain investment income that included real estate and exempted qualified real estate professionals.

Congress passed the so-called Medicare tax in 2010, and it went into effect on Jan. 1 of this year. It applies to individuals with adjusted gross incomes above $200,000 and joint returns with an AGI of more than $250,000. Capital gains on the sale of a primary home totaling less than $250,000 for an individual and $500,000 for joint filers are still exempted. But the Medicare tax has ruffled feathers even if it affects a small and affluent group of people and transactions.  Read More

Accounting 2013

Squaring Bill de Blasio’s Ideology With Real Estate Accounting

800px-Bill_de_Blasio_and_family

The question of whether New York’s first family-elect will live in Gracie Mansion has momentarily become the biggest real estate story of Bill de Blasio’s fresh, landslide mayoral victory.

But despite a well-publicized thawing of sorts between Mr. de Blasio and the business and real estate elite in the last weeks of the mayor’s race, the left-leaning Democrat will soon legislate development and taxes rather than murkily tackle them through oratory.

Some real estate tax specialists are uneasy about the de Blasio administration. Read More

Accounting 2013

REIT So Sweet: Investors Reconsider Real Estate Investment Trusts

REIT

Tax-advantaged Real Estate Investment Trusts are likely to gain favor among investors, boosted by increasing tax rates, recovering real estate prices and faster-than-anticipated growth, according to Paul Becht, audit partner at Holtz Rubenstein Reminick LLP.

The U.S. already raised the tax rate on qualified dividends to 20 percent, from 15 percent, making REITs more attractive relative to other equity investments. And there’s a possibility of more tax rate adjustments as the government continues to cast around for ways to balance the budget. Read More

Accounting 2013

Brick-and-Mortar Sleuthing: The Forensic Number-Crunchers Behind This Year’s Biggest Accounting Trend

Detective-with-smoke-flipped

The recession and slow-growing economy of the past four years have led to more forensic lease audit work for accountants, as tenants and landlords try to rein in expenses.

Disputes over tenants’ responsibility for repair and improvement costs in addition to their base rent are seldom publicized, since they tend to be settled out of court, but substantial money can be at stake.

“In one instance, I actually recovered $1.9 million for a tenant,” said Thomas Woodward, director of real estate advisory services at Holtz Rubenstein Reminick LLP. “It’s not unusual for me to come up with a million here and a million there.” Read More

Accounting 2013

Succession Planning: How Real Estate Dynasties Pass the Torch

Lew Rudin, Bill Rudin, Jack Rudin

When it comes to succession plans, real estate insiders start reading the tea leaves early. After Martin Burger was tapped as Silverstein Properties’ co-chief executive in December 2011, Mr. Burger told The Commercial Observer that the company’s larger-than-life chief executive, Larry Silverstein, now 81, had “already made the decision” during conversations between the colleagues two years prior.

“I don’t think Larry’s ever going to retire,” Mr. Burger added. “He’s a force of nature.”

The prescience among real estate dynasts to plan ahead often collides with their desire to remain in control as long as they can, real estate titans and accountants acknowledge.

“Real estate companies do organize, but what I see there as opposed to in other industries is more of the people staying involved a lot longer,” said Rob Gilman, a partner at the accounting firm Anchin, Block & Anchin LLP. “In other businesses, people retire at 65 years old. The matriarch or patriarch of a lot of these real estate families stays on well into her or his 70s.” Read More

Accounting 2013

Crunching The Numbers On Sandy

The announcement last week that Liberty Mutual had signed a 10-year, 120,000-square-foot lease at 55 Water Street was a rare and welcome piece of good news at a building and corridor of lower Manhattan exceptionally hard-hit by Superstorm Sandy.

The 53-story Financial District skyscraper took on 32 million gallons of water following the October 29 natural disaster. A month later, 30 people were treated for injuries after the basement caught fire during electric repair work. News that Liberty Mutual would be doubling its footprint in the property no doubt came as a relief to the landlord, New Water Street Corp., as it poured $200 million worth of renovations into the ailing tower.

The woes of the building at 55 Water Street are emblematic of those afflicting Manhattan commercial properties affected by Sandy. Accounting firms working on their behalf as they seek damages are all too familiar with the sort of cascading problems wrought by the storm that require a web of insurance plans and clauses spanning wind, flood, blackout and business interruption insurance. Read More