Cherry Bekaert: Real Estate & Construction Industry Guidance: Recent Episodes
Cherry Bekaert LLP
Cherry Bekaert’s podcast for real estate and construction where we discuss developing trends and market dynamics as well as tax and accounting tips that could impact your business.
The Inflation Reduction Act (IRA) drastically changed the 45L Energy Efficient Home Credit (Section 45L) and the Section 179D Energy Efficient Commercial Buildings Deduction (Section 179D) quantities and requirements, thus allowing more opportunities for home builders and multi-family developers constructing energy-efficient homes to earn money back. As a result of the major changes in the Section 45L tax credit, there are new qualifications that businesses must meet to benefit from the energy tax opportunities.
In this episode of the Real Estate and Construction Podcast, Mark Cooter, Real Estate, Construction & Hospitality Industry Practice Leader, and Ron Wainwright, Energy Tax Credits & Incentives Leader, discuss how the real estate and construction industry can best utilize the Section 45L tax credit.
This conversation includes:
- Background on Section 45L
- Advantages from Section 45L for real estate and construction companies
- Requirements to qualify
- Examples of successfully utilizing Section 45L
Related Guidance
- Take Advantage of New Section 45L Tax Credit Opportunities Under IRA
- What the Inflation Reduction Act Means for the 45L Energy Efficient Home Credit
- Understanding the Expanded Benefits of Energy Tax Incentives Under 179D and 45L
- How the Real Estate and Construction Industry Benefits from the Inflation Reduction Act of 2022
On January 29, 2023, new requirements for prevailing wage and apprenticeship, as outlined in the Inflation Reduction Act of 2022 (IRA), went into effect. These requirements aim to create good paying jobs in the clean energy space by offering enhanced tax credits to participating taxpayers.
The IRA is critical in providing good paying jobs through offering enhanced tax benefits for a range of clean energy and green energy projects to taxpayers. The Davis-Bacon Act ensures prevailing wages are paid to workers on such projects and that registered apprentices are utilized, in accordance with the IRA.
By pairing climate investment with creating good paying jobs, the IRA’s unparalleled investments to fight the climate crisis will help improve job quality in clean energy industries and incentivize the expansion of related workforce training pathways.
Taxpayers that wish to take advantage of enhanced clean energy tax benefits must establish that all laborers and mechanics are paid the applicable prevailing wage, including fringe benefits, for all hours performing construction, and in some cases alteration or repair, on the site of a qualified facility.
Mark Cooter, Real Estate & Construction Leader, welcomes Ron Wainwright, Tax Credits & Incentives Advisory Partner, on Cherry Bekaert’s Real Estate and Construction podcast to learn more about prevailing wage and apprenticeship requirements.
On this podcast the team will unpack the background of the IRA and answer the following questions:
- What is a prevailing wage and how do you comply with it?
- How do the prevailing wage and apprenticeship requirements impact real estate and construction firms?
- When do prevailing wages need to be paid to qualify?
- To what types of facilities do prevailing wage and apprenticeship requirements apply?
The Inflation Reduction Act (IRA) was signed into law in August 2022 and creates huge tax credit incentive savings for real estate and construction groups that prioritize clean energy. One tax provision of the IRA was the 45L Energy Efficient Home Credit.
Mark Cooter, Cherry Bekaert’s Real Estate and Construction Practice Leader, invites Ron Wainwright, Strategic Tax Partner and Leader of the Firm’s Energy Tax Credits & Incentives Practice within the Tax Credits and Incentives Advisory group, and Bill Harbeson, a manager at Cherry Bekaert, will discuss how 45L has changed with the IRA and how.
The Podcast Covers:
- What is 45L?
- What is changing with 45L in 2023?
- How do 179D, Cost Segregation, and 45L interact?
- How can Cherry Bekaert help before construction begins?
Related Thought Leadership:
- How the Real Estate and Construction Industry Benefits from the Inflation Reduction Act of 2022
- Inflation Reduction Act of 2022: Key Income Tax Provisions
- Inflation Reduction Act of 2022: Details & Tax Changes
The recently passed Inflation Reduction Act (“IRA”) on the 179D deduction is incredibly important and lucrative new legislation for the Real Estate and Construction industry. The 179D is a tax deduction to incentivize builders and building designers to create energy-efficient commercial buildings. The IRA increased the maximum tax deduction from $1.80 per square foot to $5.00 per square foot.
Mark Cooter, Cherry Bekaert’s Real Estate and Construction Practice Leader, invites Ron Wainwright, Strategic Tax Partner and Leader of the Firm’s Energy Practice within the Tax Credits and Incentives Advisory group, and Bill Harbeson, a manager at Cherry Bekaert, to discuss the impacts of this legislation as well as how to qualify and what to look for in a 179D provider to take advantage of this beneficial tax deduction.
The Podcast Covers:
- Introduction to 179D
- New Updates to 179D with the Inflation Reduction Act of 2022
- How to Qualify for 179D
- What does a taxpayer need to look for in a 179D provider?
Subscribe today for further information from Cherry Bekaert on the different benefits and tax credits the real estate and construction companies can qualify for and receive.
Join Jason Hoard, Tax Partner, as he moderates a panel of Cherry Bekaert professionals on the opportunities and pitfalls in OZ structuring. The panel will discuss a variety of topics including how an OZ investment will fit into your overall investment plan, the implications of withdrawing from a Qualified OZ fund, uncovering opportunities with debt including basis issues, and the benefits of carried interest.
Listen to the other podcasts in our OZ Fund Series:
- Part 1 – Opportunity Zone Overview
- Part 2 – Opportunity Zone Impact on Real Estate
- Part 3 – Operating a Qualified Opportunity Zone Business ("QOZB")
- Part 4 – Meeting the Tests for a Qualified Opportunity Zone Business ("QOZB")
- Part 5 – Optimizing Alternative Capital Sources
Join Ron Wainwright, Partner and Leader of the Firm’s Credits & Accounting Methods practice, and Peter Byford, NMTC Program Senior Manager with Tax Advantage Group by Cherry Bekaert, for a discussion on capital formation. They will analyze the traditional OZ capital stack, highlight the potential synergy with New Market Tax Credits and other additional credits, and examine the implications of social impact investing.
Listen to the other podcasts in our OZ Fund Series:
- Part 1 – Opportunity Zone Overview
- Part 2 – Opportunity Zone Impact on Real Estate
- Part 3 – Operating a Qualified Opportunity Zone Business ("QOZB")
- Part 4 – Meeting the Tests for a Qualified Opportunity Zone Business ("QOZB")
- Part 6 – Panel Discussion: Opportunities & Pitfalls in Your Opportunity Zone ("OZ") Structuring
Join Michael Elliot, Tax Director, and Russ Nash, former Tax Senior Manager, for a deep dive on the five basic tests required for a business to qualify as a QOZB:
- A trade or business for which substantially all (70 percent) of its tangible property (owned or leased) is QOZB property
- At least 50 percent of the business’s total gross income must be derived from the active conduct of a business in the QOZ
- A substantial portion (40 percent) of the business’s intangible property is used in the active conduct of the QOZB
- Non-qualified financial property must be less than 5 percent of the average of the aggregate unadjusted basis of the business’s property
- “Sin” businesses are prohibited
Listen to the other podcasts in our OZ Fund Series:
- Part 1 – Opportunity Zone Overview
- Part 2 – Opportunity Zone Impact on Real Estate
- Part 3 – Operating a Qualified Opportunity Zone Business ("QOZB")
- Part 5 – Optimizing Alternative Capital Sources
- Part 6 – Panel Discussion: Opportunities & Pitfalls in Your Opportunity Zone ("OZ") Structuring
Join Daniel Metzel, Tax Partner, and Greg Davis, Tax Partner, for an overview of the requirements of establishing and operating a Qualified Opportunity Zone Business ("QOZB"). They will break down the intent of the final regulations, the pros, and cons of a one tier versus a two-tier structure, and the applicable testing restrictions.
Listen to the other podcasts in our OZ Fund Series:
- Part 1 – Opportunity Zone Overview
- Part 2 – Opportunity Zone Impact on Real Estate
- Part 4 – Meeting the Tests for a Qualified Opportunity Zone Business ("QOZB")
- Part 5 – Optimizing Alternative Capital Sources
- Part 6 – Panel Discussion: Opportunities & Pitfalls in Your Opportunity Zone ("OZ") Structuring
Join Richard Schneider, Partner and Chairman of Cherry Bekaert’s OZ Task Force Team and Polly Hoxha, Senior Manager and Cherry Bekaert’s OZ Champion for Washington D.C., as they kick off our six-part series on the Opportunity Zone ("OZ") regulations which will address fund level topics.
Our first podcast series focused on OZ investor incentives and provided insight on key topics that investors need to know. You can catch up with our Investor Series podcast here.
Stay tuned for the remaining five podcasts in our OZ Fund Series:
- Part 2 – Opportunity Zone Impact on Real Estate
- Part 3 – Operating a Qualified Opportunity Zone Business ("QOZB")
- Part 4 – Meeting the Tests for a Qualified Opportunity Zone Business ("QOZB")
- Part 5 – Optimizing Alternative Capital Sources
- Part 6 – Panel Discussion: Opportunities & Pitfalls in Your Opportunity Zone ("OZ") Structuring"
Join Mark Cooter, Partner and Real Estate & Construction Industry Practice Leader, and Shannon Makosiej, Tax Senior Manager, for a discussion on how the newly released Opportunity Zone (“OZ”) final regulations impact real estate specifically. They will highlight the recent law changes finalized by the U.S. Treasury which resolve some ambiguity and provide clarity around issues such as the substantial improvement requirement, original use and triple net leases.
Listen to the other podcasts in our OZ Fund Series:
- Part 1 – Opportunity Zone Overview
- Part 3 – Operating a Qualified Opportunity Zone Business ("QOZB")
- Part 4 – Meeting the Tests for Operating a Qualified Opportunity Zone Business ("QOZB")
- Part 5 – Optimizing Alternative Capital Sources
- Part 6 – Panel Discussion: Opportunities & Pitfalls in Your Opportunity Zone ("OZ") Structuring
Join Ron Wainwright, Partner and Leader of the Firm’s Credits & Accounting Methods practice, and
Jason Hoard, Tax Partner, for a discussion on what we’re seeing nationally with respect to Opportunity Zone ("OZ") investments, particularly in the light of COVID-19. They discuss how the current economic conditions have affected OZ investments and provide insight to possible relief.
In addition, they will cover qualified opportunity fund exit strategies.
This is the final in a series of four podcasts for investors highlighting the updated regulations and future implications of this program.
Part One of our Opportunity Zone (OZ) Series we provided an overview of the OZ incentives and Part Two discussed the capital gains tax incentives. In Part Three we dive into the triggering events that you should avoid in order to meet the guidelines under the OZ regulations.
Join Cherry Bekaert’s Mark Cooter, partner, and Shannon Makosiej, senior manager, for a review of events that investors should avoid in order to keep the deferred gain deferred in a qualified opportunity fund (QOF). They will also provide examples of these type of inclusion events to further outline what investors should not be doing during the holding period.
Also, stay tuned for the last and final podcast in this series the week of April 13 on final post 10-year dispositions and how it affects investors.
Part One of our Opportunity Zone (OZ) Series we provided an overview of the OZ incentives and discussed the final regulations of this program. Part Two will dive deeper into the capital gains tax incentives and the importance of timing as it relates to the rules of the program.
Join Cherry Bekaert’s Catherine Bazley, partner, and Michael Elliot, director, for a conversation specifically for investors and when you should consider an OZ investment. They will also provide examples to further outline the importance of timing these investments.
Stay tuned for the remaining two OZ podcasts:
- Part 3 – Key inclusion events – week of March 30
- Part 4 – Final post 10-yr dispositions and how it affects investors – week of April 13
The Opportunity Zone (OZ) tax incentives provide investors with an opportunity to defer recognition of gains on sales of assets, permanently reduce a portion of the deferred gain to be recognized and permanently exempt any future gain with respect to reinvested proceeds.
Join Richard Schneider, Partner and Chairman of Cherry Bekaert’s OZ Task Force Team and Polly Hoxha, Senior Manager, for a discussion on OZ incentives for investors. This is the first in a series of four podcasts highlighting the final regulations of this program.
Below is the schedule and topics for the remaining three OZ podcasts:
- Part 2 – Gains and Timing of being able to invest – week of March 16
- Part 3 – Key inclusion events – week of March 30
- Part 4 – Final post 10-yr dispositions and how it affects investors – week of April 13