Real estate developers and contractors need to be strategic as they move their projects through the steps of acquisition, development, property maintenance, and/or selling. To develop cost-effective real estate projects, you need to understand the data that will back your project's viability. As any developer knows, economic trends can heavily impact project plans.
There are many tax credit opportunities developers can take to make the project affordable and enticing for investors. These include (but are not limited to):
To maximize your profit potential, focus on your niche. By focusing on specific development projects, you will know the competitive factors, the investment potential, and the rental or sale benchmarks for that development type. Knowing the numbers will drive the best results for you and your investors.
Economic factors can be unpredictable in the real estate industry. The effect of government funding and unemployment rates should be factored into your development plans, as those will impact your bottom line when building, leasing, or selling your property. You will also want to understand the demographics of the area you are working in. The aging population, millennial housing preferences, urban vs. rural choices, and the impact of online vs. brick-and-mortar storefronts all weigh into how financially sound your development will be.
Business professionals need easy access to information to make timely decisions. SVA has what you need, when you need it. Choose a topic below or just contact us directly. Our expertise is ready anytime you need it.
Working with lenders both locally and nationally, SVA helps real estate owners and developers find the appropriate financing sources for their unique projects. With a keen eye focused on HUD's various financing options, state housing agencies, HOME, NHP and the CDFI Fund, our experts have the necessary understanding of both terms and technical requirements for each opportunity.
SVA has specific expertise in working with various low-income housing tax credits and new markets tax credit investors and syndicators. Utilizing this experience, we assist owners and developers in negotiating terms in letters of intent, conducting comparisons of letters with other potential investors, and reviewing partnership or operating agreements.
Understanding and interpreting complicated federal and state compliance and regulatory rules is not an easy task. For those organizations in heavily regulated industries, SVA will assist you in both understanding and meeting regulatory burdens.
The tax-deferred exchange remains the most important tool in planning for non-personal real estate transactions. The 1031 exchange is a swap of one investment property for another, allowing capital gains to be deferred. We work with clients to navigate the many rules and regulations that affect these transactions. We also will act on our clients’ behalf to arrange and act as a liaison between the various other professionals required to complete the transaction according to strict IRS rules.
A cost certification is an audit of project costs and, when applicable, determining which expenses are eligible costs for certain tax credits or grant programs. SVA has extensive experience in performing cost certifications for multiple programs.
Energy Tax Credits and Deductions
The Energy-Efficient Commercial Buildings Tax Deduction (Section 179D) applies to newly constructed buildings and improvements to existing buildings that meet or exceed certain energy reduction requirements. This deduction is based on the square footage of the property. In addition to building owners, other project participants (such as designers, architects, engineers, contractors, environmental consultants, and energy services providers) may be eligible to share in the tax incentive on an energy-saving project. We can help you take advantage of these ever-changing subsidies to help finance your project.
Historic Rehabilitation Tax Credits
Historic rehabilitation preserves previous generations' architectural vision and cultural heritage and provides distinctive spaces to live and work. Bring us your plans and we will help you structure financing and tax credits to make historic rehabilitation both feasible and profitable. We understand the Certified Historic Structure (CHS) Tax Credit program's technical requirements and monitor changes to the tax codes.
Low-Income Housing Tax Credits
Low-Income Housing Tax Credits (LIHTC) make affordable housing developments not only possible but financially viable. The allocations are limited and the competition is fierce. Overall, one in three projects receive funding. There are sixteen categories used to score your application and developers, who are successful in receiving LIHTC, know that details in the application process are crucial. Our team has been instrumental in helping developers obtain these credits.
New Markets Tax Credits
Investors who make qualified equity investments in low-income communities can qualify for federal New Markets Tax Credits (NMTC). The NMTC program is designed to attract private capital into low-income communities. SVA works directly with both developers and Community Development Entities (CDE), which invest in low-income communities, to structure their transactions using the NMTC program.
Tax Incremental Financing (TIF) is a development tool used by municipalities to help finance varied property improvement projects from regional shopping centers to sizeable single-use facilities. Cities have found TIF critical in redeveloping blighted areas and attracting new economic development to their communities. SVA can assess the potential of utilizing TIF as part of an overall financing structure.
SVA works closely with commercial real estate developers, landowners, and contractors to manage resources, structure transactions, facilitate tax strategies, and assure compliance with federal and state income tax regulations. We specialize in commercial, retail, industrial, and office developments including large acreage developments with Big Box and related commercial pad buildouts both regionally and nationally.
The QOZ program created qualified opportunity funds designed to increase interest in developing distressed communities. The funds are an attractive investment for developers as they can defer capital gains by investing the gains into these projects.
SVA will help you determine the how to utilize this impactful investment tax advantage.
In addition to completing annual tax returns for your real estate projects, our tax savings strategies include:
Structuring the transaction effectively will help you create winning proposals. Using an internally developed template for financial modeling and feasibility, we can forecast the results of different financing strategies. This process includes creating projections and model data to determine gaps to review to make the transaction feasible. The benefit of this detailed analysis is in providing investors the full financial picture of the project, so they can see the yield, or ROI they need. The template produces schedules showing financial projections for:
There is a misconception that R&D tax credits are reserved for companies that have a dedicated R&D staff. The truth is any business can qualify as long as they adhere to a few simple guidelines outlined in this eGuide.