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Commercial Real Estate FAQ With Dr. Forrest Bryant On Commercial Property Investors & Due Diligence

What Areas Of The Tax Code Do You See Apply Or Discussed Most When It Comes To Commercial Property Investing?

The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.

There are many benefits that can be found in the tax code when it comes to commercial property investing. Cost segregation study is the one that’s most often used, and it can be used in a residential portfolio as well as a commercial property portfolio. For investors that have 10, 20, or 30 residential properties, they might find that cost segregation study is beneficial to their returns. Another is taking passive losses where you’re able to find them and using those passive losses against active income. 

Richard Wilson: What areas of the tax code, or real estate tax code, do you see applied or discussed most when it comes to commercial property investing? 

Dr. Forrest Bryant: You know, I think obviously cost segregation study is probably the first one that comes to mind. That’s across the board from I would say almost every commercial real estate project that we go through has a cost segregation study. And one thing along that line that maybe a lot of investors don’t know is that that can also apply to residential. So a lot of our investors have portfolios of single family homes, and doing a cost segregation study on single family homes, of course there’s some economies to scale there or if you’ve got two houses it might not make sense but some of our investors have 10 houses, or 20 houses, or 30 houses, so once you get up to that level and you start buying and selling portfolios of single family homes that can really make a lot of sense to do that. 

And you know also I’ll mention another one I think real estate professional is another big one especially for a lot of our clients that are high end income earners in a high tax bracket. A lot of times you have a non-working spouse who can contribute to the real estate activities and obviously the benefit of that is to take passive losses and for a married professional, they’re able to take those passive losses against active income where those passive losses are generated from some LP investments into rental properties or any type of syndicated commercial real estate deal. 

Richard: Right, right. Great, yeah I know your knowledge there goes deep in your community has done an excellent job kind of sharing best practices and featuring CPAs that work with clients in that way I know. 

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Richard Wilson

Richard Wilson

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