Read This Before You Build!

[Julio Gonzalez]

When should you start tax planning on a building? A lot of people think the tax planning starts once the building is completed. However, you can actually save millions of dollars in taxes by starting during the blueprint phase.

Here are some examples of ways to save on taxes:

• For conference rooms in a hotel, Instead of installing regular walls, if you install moveable walls, the walls could be depreciated using the rules of bonus depreciation.
• For a multi-family apartment complex, changing the model of the bathroom exhaust fan to a variable speed could help qualify for the energy credit which is $2,000/unit.
• For a large apartment complex, installing a ceiling fan could allow you to qualify for 45L tax credits.
• For a hotel, if the porte-cochere is detached from the hotel building, it could be fully deductible in year one as it could be considered a land improvement. Otherwise, this carport would be depreciated over 39 years with the hotel building.
• In an office building, instead of installing a permanent flooring such as glued down wood or tile, install flooring that is considered personal property such as luxury vinyl planks or carpets.

These are just a few of the many ways that tax planning before construction can save you money. As always, be sure to contact your accountant to make sure these situations apply to your property!

Have you utilized tax planning strategies in the blueprint phase?