The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27 provides individuals and businesses with much-needed economic relief from the financial challenges created by the COVID-19 pandemic. While much attention has been focused on government hand-outs to individuals and certain businesses, the law includes several provisions that provide specific relief to commercial real estate investors.
For example, the CARES Act amends existing law by repealing the 80 percent taxable income limit on net operating losses for tax years beginning before 2021 and allowing businesses to amend previously filed tax returns and carry back net operating losses (NOLs) from tax years 2018, 2019 and 2020 for up to five previous years. The law also allows partnership to deduct more business interest expense than was previously allowed. Partnerships, in particular, may deduct as business interest expense in 2020 up to 50 percent of adjusted taxable income (ATI), up from 30 percent. Any limited interest expense may be carried forward to future tax years. And, finally, the CARES Act provides a 15-year recovery period for qualified improvement property (QIP), allowing property owners to claim 100 percent bonus depreciation and immediately write-off costs incurred to improve the interior of nonresidential property.
With offices in Miami, Orlando, New York City and Geneva, the team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email firstname.lastname@example.org.