If you have not been to a Buc-ee’s, they are quite the American experience. I remember the first time walking into the actual store itself, I thought I had walked into a major sporting event. It was loud and energic! I loved it and my sons did too!
Here’s an excellent post from Chris Koerner with the locations of future Buc-ee’s. no doubt his assumptions are right about those who invest in and around these giant C-stores. These impact both residential investment properties as well as commercial properties.
If you’ve been to South Carolina, you know how much the people LOVE QuikTrip! They are awesome gas stations and convenience stores and they are all over the place here in the Upstate.
This QuikTrip in Piedmont just sold according to the GSA Report. It’s located at 2085 Highway 86, Piedmont. Terms of the deal were not disclosed. The property sits on 3.19 acres and was built in 2019. If I see the sale hit the tax record, I’ll update this post with the sale information, but for now, nothing is showing up. It must be a very recent sale.
According to the article in GSA Report, “Timothy Nichols, Sean Sharko and Austin Weisenbeck, investment specialists in Marcus & Millichap’s Chicago Oak Brook office, had the exclusive listing to market the property on behalf of the seller, a South Carolina limited liability company, and procured the buyer, a Phoenix, Ariz.-based limited liability company, the release stated. Ben Yelm, broker of record in South Carolina, assisted in closing the transaction.”
Tunnel Car Washes and Cost Segregation – What you need to know about 60% bonus depreciation.
If you purchased a tunnel car wash in 2024, you’re going to want to cost segregate it. Back in 2022 when bonus depreciation was 100% many CPAs just marked it all as land improvement and took 100%. I get that. In 2023, the same thing happened but it was 80% bonus. Now in 2024, bonus is 60%. You are leaving money on the table if you don’t do cost segregation. In many cases it’s $300,000 – $500,000 you’re leaving on the table by not doing cost segregation.
I’ve had a custom tool built to specifically calculate and show you the year by year tax savings you’ll get from doing cost segregation vs. not doing cost segregation and just letting your CPA mark your depreciation schedule as all 15 year class life and taking 60%. Take a few minutes and learn as I try to demo this new calculator. If you have a property and would like me to run the numbers, let me know. Check out the 4 minute video explanation below.
Everyone who buys a tunnel car wash in 2024 and who has basis, should do a cost segregation study. Of course consult with your own tax advisor, but get armed first with the information. I think I’m the only one that I know of that has this tool to calculate this for you. If you purchased your car wash with all 1031 exchange funds then there’s no basis. If you purchased it partially with 1031 funds and have new debt / money, there may be enough basis to study. Let me run the numbers. I work all over the country.
If you aren’t doing cost segregation on a 2024 Tunnel Car Wash you may be leaving $100k on the table.
Congratulations to Cheyenne Putnam of Aline Capital in representing the seller in getting this large deal done in Charlotte, NC. The retail center sold for $14,995 according the release from Aline Capital on LinkedIn – published below.
Aline Capital is a commercial real estate advisory firm in Greenville, SC. Cheyenne Putnam is their Director of Retail. It’s nice to see there are some big deals still getting done.
Michael Dodds is a well established commercial appraiser in South Carolina’s midlands and he published some very insightful information on LinkedIn the other day about Industrial Outdoor Storage.
Industrial Outdoor Storage has become quite the asset with a number of big players getting involved and either buying these up or developing them. Just remember if you own one of these, you should reach out and have us run some numbers. These do incredibly well from a cost segregation standpoint.
If you’re looking for a commercial appraiser in the midlands of South Carolina, here’s Michael’s website.
If you own a mobile home park and plan to keep it for the next few years or longer and if you haven’t done cost segregation, you may want to take a look at it. Mobile home parks are profitable so even if this is a passive income stream for you, you likely owe taxes each year because of this investment. If you do cost segregation, you’ll be able to defer taxes for years most likely. I’d be happy to talk with you about it.
Step-up in Basis – we’ve all heard this term but I suspect people are missing out on an opportunity when someone who has an ownership stake in a building dies and his/her interests passes to the rightful heir or spouse in many cases.
I’ve mentioned before that if an owner dies and if there is still decent depreciable basis remaining in the buildings he/she owns, the CPA or tax attorney or executor hopefully are aware enough to inquire about getting a cost segregation study done on that buildings or buildings before the estate files the final tax return. This is a sweet deal for the heirs and might put an extra $10k, $50k, $100k in their pockets instead of going to the IRS.
But what about when a married couple owns investment property or commercial property together and one of them dies. Let’s look at an example. (And with all of this, I’m not a CPA nor an attorney… if you find yourself in this situation, you will need to seek your own tax and legal advice. Some states may have different rules as to how this is applied).
Couple purchased a commercial building 20 years ago for $1,000,000. One of the spouses dies. An appraisal is done and it’s worth is now $3,000,000. The surviving spouse gets a step-up in basis. In this case they get 50% of the appreciated value and the initial purchase price. So the step-up is $1,500,000. Because they have owned this property for 20 years, they had depreciated it already by 50% and it’s likely quite profitable at this point. The surviving spouse can do a cost segregation study on that new step-up in basis and likely save a significant amount on their taxes. Just for simple math, let’s say 20% of it can be accelerated…that’s $300,000 depreciation deduction that they could take based upon studying the step-up.
I work with a lot of commercial real estate brokers around the country but it’s just a tiny fraction of the number of CRE brokers who should be using cost segregation in their practices. It’s a missed income opportunity for the broker but more importantly it’s a missed opportunity to provide a very powerful value-added service that will have a material positive impact on your commercial real estate client. You also leave yourself exposed that someone else might call them up to make mention of it and start to build a relationship with that client.
As the key point of contact in a transaction and tip of the spear so to speak, commercial brokers work with buyers of commercial real estate to go through the financials, due diligence, market opportunity and pricing of all kinds of buildings. Why not discuss cost segregation with your clients at the same time? It’s a key part of owning commercial real estate. It can help improve an owner’s cash flow, reduce their immediate tax liability and help them have a better understanding of their building. It definitely affects the proforma in a positive way. You don’t need to be the expert. You should have a partner in the business to whom you can connect your client for a no cost, no obligation consultation and estimate.
If you’re a commercial broker and you don’t have a trusted partner for cost segregation, consider giving this short video presentation a watch. It’s 11 minutes long. I provide professional, engineering-based cost segregation services all over the country. Our firm is one of the largest and oldest in the country. We have experience with all properties types and classes in all 50 states. We’ve now successfully completed more than 50,000 studies.
By implementing cost segregation into your commercial real estate practice, you will not only get paid referrals from us, but you will gain new clients and close more deals. It will happen. Everyone’s looking for an edge and I’m telling you, THIS will give you an edge in the marketplace. Give this a watch and then reach out to me for a conversation.
If you go back to my home page, you’ll see a map of many of the properties we have studied in the past couple of years. Under the “Projects Completed” tab on the home page, it has a drop down so you can see pictures of the buildings our team has studied. Many of these projects have come to us by referral from commercial real estate brokers. Some also come to us from CPAs and building inspectors.
Reach if you’d like to talk about this program to incorporate cost segregation into your commercial real estate practice.
Here’s an example of how a developer who is building a $30,000,000 multi-family property can defer $1,000,000 in income taxes over the first 5 years by utilizing Green Zip Tape rather than standard sheetrock tape. The video below is 3 minutes long. Green Zip Tape works on projects $10 million or more.
Green Zip Tape leverages financial incentives to build sustainably and drive positive environmental change and will revolutionize the way you manage your real estate construction portfolio.
Tax Savings: 5-10% of your construction costs move from 27.5 or 39 year class life to 5 year class life allowing for faster depreciation
Environmental Impact: Eligible for up to 25 LEED Credits (17 direct, 8 indirect)
IRS-Approved Asset Reclassification: The only tape approved by the IRS to convert interior non-load bearing walls into 5-year depreciable assets. Allows for potential wall relocation and drywall reuse.
Improved Remodeling Process: Enables quieter, quicker, and cleaner demolition, remodels, repairs, and retrofits
Explaining Green Zip Tape and how it can help building owners and developers defer more taxes
So you are excited to take advantage of bonus depreciation, but did you know that most states don’t fully conform with the federal bonus depreciation rules? Many states don’t allow any bonus depreciation to be able to be taken. Some states allow partial bonus depreciation to be taken.
Bloomberg has a comprehensive list of which states allow for bonus depreciation and which ones don’t. As always with anything with tax, please consult your own tax advisor to understand how bonus depreciation can benefit you on both a Federal and possibly state level when it comes to reducing income tax liability.
