Landlords had a right to be upset, as they were left out of the government’s plan to fund small businesses.
However, what the landlords didn’t notice is that the relief package includes a tax-provision that could “set some property owners up with a million-dollar windfall,” according to Crain’s New York.
"Everyone is running around now, fighting to get their money from the federal government," said Lewis Taub, tax director in the New York City office of accounting firm Berkowitz Pollack Brant. "They should know there is another way: Get your taxes back.”
The issue is that the Tax Cuts and Jobs Act of 2017 allowed businesses to deduct the full value of certain capital investments. However, the bill didn’t include interior improvements to nonresidential properties, which was allegedly a “glitch.” Office and commercial building owners were forced to stretch the deductions for their investment over 39 years, which limits the value.
The CARES Act reverses this. Property owners are now allowed to amend their 2018 tax reduction. It can now be spread over 15 years.
“Under the former rules, an interior improvement with a $2 million deductible value in 2018 would have been deducted over only the 39-year period, worth about $51,000 yearly,” reads Crain’s. “With the CARES Act update, the property owner can amend the return and cash in the full $2 million deduction.”
The deduction also applies to tenants. Restaurant owners and retailers have, who invest in interior design, can benefit greatly from this.
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Read the full story in Crain’s New York: https://www.crainsnewyork.com/real-estate/2m-tax-break-landlords-tucked-inside-covid-19-rescue-bill
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