What to Expect from Figeroux & Associates in Real Estate Tax Law

Introduction
Real estate transactions and holdings are subject to a complex array of tax laws, from property tax assessments to capital gains tax upon sale. For individuals and businesses, effectively managing these tax obligations is crucial to maximizing returns on investment and minimizing unnecessary costs. Figeroux & Associates is a law firm specializing in real estate tax law, offering a comprehensive range of services aimed at assisting clients with compliance, property tax reduction, tax-efficient acquisitions, and 1031 exchanges.

This article provides an in-depth analysis of each of these services, outlining what clients can expect when working with Figeroux & Associates to navigate the complexities of real estate tax law.

1. Ensuring Compliance with Tax Issues, Including Property Taxes, Capital Gains Taxes, and Depreciation Deductions

Real estate owners face numerous tax obligations, including property taxes, capital gains taxes on sales, and depreciation deductions. Non-compliance with these requirements can result in penalties, increased tax liabilities, or lost tax benefits. Figeroux & Associates assists clients in understanding and complying with the myriad of tax obligations that come with property ownership and transactions.

Property Tax Compliance

Property taxes are generally assessed by local governments and can represent a significant annual expense for property owners. Compliance with property tax requirements involves accurate assessment review, timely payment, and dispute resolution when valuations are incorrect.

What Clients Can Expect:

• Assessment Review and Compliance Verification: Figeroux & Associates reviews property tax assessments to confirm they align with the property’s fair market value. This verification helps clients avoid overpaying and ensures they comply with local tax obligations.
• Timely Tax Payment Support: Property taxes often have strict payment deadlines. The firm provides reminders and support for timely payments, helping clients avoid late fees and penalties.
• Documentation and Recordkeeping for Future Transactions: The firm advises clients on recordkeeping for property tax payments, which is essential for accurately reporting property costs, tax-deductible expenses, and potential basis adjustments for future sales.

Capital Gains Tax Compliance

When selling a property, capital gains tax may be due on the profit earned. Managing capital gains tax obligations requires planning and understanding applicable exclusions and deductions.

What Clients Can Expect:

• Capital Gains Calculation and Reporting Assistance: Figeroux & Associates assists clients in calculating capital gains accurately, taking into account adjustments to the basis for improvements and other expenses related to the property.
• Utilization of Capital Gains Exclusions: For qualifying properties, such as a primary residence, clients may be eligible for capital gains exclusions. The firm provides guidance on eligibility for these exclusions, helping clients reduce or eliminate their taxable gains.
• Guidance on Installment Sales and Deferral Options: In certain cases, deferring capital gains tax by structuring sales as installment sales can provide tax benefits. The firm advises clients on installment sale structures, ensuring compliance while optimizing tax outcomes.

Depreciation Deduction Management

For investment properties, depreciation deductions are an essential tax benefit, allowing property owners to recover the cost of property improvements over time.

What Clients Can Expect:

• Depreciation Schedule Setup and Maintenance: Figeroux & Associates assists clients in establishing depreciation schedules, ensuring that they maximize deductions without running afoul of tax regulations. This includes guidance on depreciation for residential, commercial, and mixed-use properties.
• Advice on Accelerated Depreciation Options: For certain types of property improvements, accelerated depreciation can lead to additional tax savings. The firm advises on whether clients qualify for accelerated depreciation under the Modified Accelerated Cost Recovery System (MACRS) or bonus depreciation, where applicable.
• Adjusting Depreciation for Renovations and Improvements: When clients make significant improvements to a property, Figeroux & Associates advises on how these changes impact the depreciation schedule, ensuring compliance with IRS rules and optimizing deductions.

Ongoing Compliance Monitoring and Support

Figeroux & Associates offers continuous support for real estate tax compliance, regularly reviewing the client’s portfolio for new opportunities and advising on compliance with changing regulations, ensuring that clients are well-prepared for any future audits or transactions.

2. Assisting Clients in Reducing Property Tax Assessments

Property tax assessments are not always accurate, and inflated assessments can lead to excessive tax burdens. Figeroux & Associates provides assessment review and appeals services to help clients reduce their property tax obligations when assessments are improperly high.

Property Tax Assessment Review and Analysis

Property tax assessments are typically based on the fair market value of a property. When assessments exceed the property’s actual value, property owners have the right to appeal. Figeroux & Associates assists clients with the assessment review process, ensuring that property taxes are based on fair and accurate valuations.

What Clients Can Expect:

• Detailed Review of Assessment Valuations: The firm conducts a thorough analysis of the property’s assessment valuation, comparing it with comparable property sales and market conditions to identify discrepancies.
• Market Analysis and Comparable Sales Research: Using comparable sales data, Figeroux & Associates evaluates the market value of the client’s property to ensure the assessment reflects an accurate valuation. This research is crucial in supporting assessment appeals.
• Preparation of Supporting Documentation for Appeals: If the property is overvalued, Figeroux & Associates assists in preparing documentation for an appeal, including market analysis, appraisal reports, and other evidence that supports a reduced valuation.

Appeal and Dispute Resolution for Property Tax Reduction

If the assessment review identifies an overvaluation, Figeroux & Associates represents clients in the appeal process, advocating for a reduced property tax assessment.

What Clients Can Expect:

• Filing of Appeals and Representation Before Local Tax Authorities: The firm handles the administrative process of filing an appeal and represents clients in hearings before local tax authorities or appeals boards.
• Negotiation with Assessors for Fair Resolution: Figeroux & Associates works with assessors to negotiate a fair valuation, seeking to resolve disputes before they escalate into prolonged appeals processes.
• Litigation Support for Unresolved Disputes: In cases where an appeal is not resolved favorably, the firm can escalate the issue through litigation, representing clients in court to pursue a fair property tax assessment.

Long-Term Property Tax Management Strategies

Beyond the immediate appeal process, Figeroux & Associates provides guidance on property tax management strategies that help clients minimize assessments over time. This includes advice on property improvements, changes in property usage, and legal exemptions that may impact future assessments.

3. Advising on Tax-Efficient Property Acquisitions

Real estate acquisitions have significant tax implications, from acquisition costs to future tax liabilities. Structuring acquisitions in a tax-efficient way can lead to substantial savings over the long term. Figeroux & Associates provides expert advice on tax-efficient property acquisitions, helping clients maximize deductions and minimize future tax liabilities.

Acquisition Due Diligence and Tax Planning

Proper due diligence is critical to a successful acquisition, particularly when considering the property’s tax implications. Figeroux & Associates assists clients with tax-related due diligence, reviewing the property’s tax history, depreciation schedules, and potential deductions.

What Clients Can Expect:

• Comprehensive Tax Due Diligence: The firm conducts a thorough tax review of the property, identifying any outstanding tax liabilities, unpaid property taxes, and potential tax risks associated with the acquisition.
• Depreciation Analysis for Future Deductions: Figeroux & Associates provides guidance on future depreciation opportunities, helping clients understand the potential tax benefits that the acquisition may offer.
• Identifying Transfer Tax Obligations and Exemptions: Certain states impose transfer taxes on property acquisitions. The firm advises on transfer tax obligations and identifies any available exemptions or credits that may reduce acquisition costs.

Structuring Acquisitions for Tax Efficiency

The structure of a property acquisition can have significant tax implications. Figeroux & Associates advises on structuring acquisitions in ways that align with the client’s financial goals and maximize tax efficiency.

What Clients Can Expect:

• Guidance on Entity Selection: For real estate investors, the choice of ownership entity (e.g., LLC, partnership, trust) can impact tax treatment and liability protection. The firm advises clients on selecting the most tax-efficient ownership structure based on the property’s use and long-term plans.
• Structuring Joint Ventures and Partnerships: For clients engaging in joint ventures or partnerships, Figeroux & Associates provides guidance on structuring these arrangements to optimize tax efficiency and ensure compliance with IRS requirements.
• Utilizing Opportunity Zones and Other Tax Incentives: For eligible properties, opportunity zones offer significant tax advantages. The firm helps clients determine eligibility and guides them in taking advantage of tax incentives tied to designated zones or redevelopment areas.

Capital Gains and Exit Strategy Planning

Figeroux & Associates assists clients in planning for future tax obligations, such as capital gains tax, upon eventual sale or disposition of the property.

What Clients Can Expect:

• Exit Strategy and Capital Gains Planning: The firm provides guidance on potential exit strategies, including 1031 exchanges, installment sales, or holding periods to qualify for lower capital gains tax rates.
• Deferred Sales and Installment Agreements: For clients looking to defer tax obligations, the firm offers advice on installment agreements, allowing capital gains to be spread over time rather than paid in a lump sum.

Ongoing Tax Planning Support for Real Estate Portfolios

For clients with substantial real estate holdings, Figeroux & Associates provides ongoing tax planning services to adapt to market conditions, regulatory changes, and new investment opportunities.

4. Handling Tax-Deferred Exchanges (1031 Exchanges)

A 1031 exchange, also known as a like-kind exchange, allows real estate investors to defer capital gains tax on the sale of a property by reinvesting the proceeds in a similar property. 1031 exchanges are subject to strict IRS rules and timelines, and compliance is essential to achieve tax deferral benefits. Figeroux & Associates provides full support for clients considering or executing 1031 exchanges.

Eligibility Assessment and Exchange Planning

The first step in a 1031 exchange is determining eligibility and planning for compliance with the IRS’s requirements for like-kind properties and timelines.

What Clients Can Expect:

• Eligibility and Exchange Suitability Review: Figeroux & Associates assesses the property’s eligibility for a 1031 exchange and advises clients on whether an exchange aligns with their financial and investment goals.
• Like-Kind Property Identification: The IRS requires replacement properties to be “like-kind” to the relinquished property. The firm provides guidance on selecting qualifying properties to ensure compliance with IRS rules.
• Timeline Management and Compliance Guidance: 1031 exchanges have strict timelines, including a 45-day identification period and a 180-day completion period. Figeroux & Associates helps clients manage these deadlines and meet all IRS requirements to avoid disqualification.

Execution and Documentation of 1031 Exchanges

Successfully completing a 1031 exchange requires accurate documentation and adherence to procedural requirements. Figeroux & Associates provides support through every step of the exchange.

What Clients Can Expect:

• Coordination with Qualified Intermediaries (QIs): A QI is essential in a 1031 exchange to hold proceeds between transactions. The firm assists clients in selecting and coordinating with a reputable QI to ensure compliance.
• Preparation of Exchange Agreements and Related Documents: Figeroux & Associates prepares the necessary documentation for 1031 exchanges, including exchange agreements, replacement property identification, and transaction records.
• Monitoring Compliance with Replacement Property Requirements: The firm monitors the replacement property acquisition to ensure it complies with the IRS’s like-kind requirements and aligns with the client’s financial goals.

Post-Exchange Compliance and Reporting

After completing a 1031 exchange, compliance with reporting requirements is essential to maintain tax deferral status. Figeroux & Associates assists with IRS reporting and recordkeeping.

What Clients Can Expect:

• Form 8824 Preparation and Filing: The IRS requires Form 8824 to report like-kind exchanges. Figeroux & Associates assists with preparing and filing this form, ensuring accurate reporting of the exchange’s details, basis adjustments, and deferred gains.
• Post-Exchange Tax Planning: Following a 1031 exchange, the firm provides ongoing tax planning guidance, advising clients on future transactions or changes in property use that may impact deferred gains.

Long-Term Strategy for Multiple or Successive 1031 Exchanges

For clients engaging in multiple 1031 exchanges, Figeroux & Associates provides strategic planning for successive exchanges, ensuring ongoing tax deferral and helping clients build a tax-efficient real estate portfolio.

Conclusion

Figeroux & Associates offers comprehensive real estate tax law services, helping clients ensure compliance, reduce property tax assessments, structure tax-efficient acquisitions, and manage 1031 exchanges. With a deep understanding of the intricacies of real estate tax law, the firm provides invaluable support for individuals and businesses looking to optimize their tax outcomes and maximize the value of their real estate investments.

For clients focused on compliance, Figeroux & Associates offers guidance on property taxes, capital gains, and depreciation deductions, helping them meet their tax obligations and avoid penalties. When property assessments are inflated, the firm assists clients in appealing for reductions, ensuring fair tax treatment. For those acquiring new properties, Figeroux & Associates advises on tax-efficient strategies to minimize acquisition costs and future liabilities. Finally, for investors seeking to defer capital gains taxes, the firm provides expert guidance on executing and reporting 1031 exchanges.

By partnering with Figeroux & Associates, clients gain access to a dedicated team of professionals who prioritize tax savings, compliance, and strategic planning, helping them achieve financial success and sustainability in real estate. Through proactive tax planning and personalized service, Figeroux & Associates ensures that clients can confidently manage the tax aspects of their real estate portfolios in an increasingly complex regulatory environment.