Real Estate

Article Dean Dorton

Opportunity Zones, introduced in Tax Cuts and Jobs Act (TCJA) of 2017, were designed to drive investment in low-income communities. The program offered investors strategic tax benefits, including basis adjustments on investments held for 10 years and the ability to reinvest proceeds from eligible capital gains into a Qualified Opportunity Zone (QOZ) fund, and defer the gain recognition until 2026.  

2026 Recognition is Here! 

Investors who deferred gains in prior years will be required to recognize those gains in 2026. This creates a unique challenge: while the cash or proceeds were received and reinvested in prior years, the gain and related tax liability become a current issue. As a result, proactive cash flow planning is a critical component of any QOZ tax strategy.  

For example, if a taxpayer sold a capital asset in 2018 and deferred a $750,000 gain by reinvesting in a Qualified Opportunity Zone, that investor must recognize the gain of $750,000 on their 2026 tax return. This creates a tax burden of approximately $178,500 (assuming a 23.8% rate). Additionally, the taxpayer must continue in the QOZ fund for at least 10 years to receive the full benefit of the tax strategy. This model creates a “cashless gain” in 2026 or a tax burden for which the investor does not have access to the related capital.  

Planning Considerations 

Given the timing and nature of the QOZ program, proactive tax planning is essential for participating investors. Important considerations include: 

  • Utilizing tax loss harvesting strategies within brokerage accounts and other investments  
  • Leverage other deductions in 2026, including increasing charitable donations, within AGI limitations, or by accelerating business deductions through bonus depreciation or Section 179 expensing.
  • Managing and scheduling tax payments to minimize penalties and ensure properly timed liquidity 
  • Researching the Qualified Opportunity Fund’s valuation, as declines in fair market value could impact the required gain recognition 

Contact Dean Dorton to learn more about Qualified Opportunity Zone tax strategies.  

Article Danielle Camara

Managing real estate portfolios shouldn’t require juggling spreadsheets, disconnected systems, and manual processes. Today’s property managers and finance teams need clear visibility into both financial and operational performance to make informed decisions and maximize net operating income.

Sage Intacct Real Estate brings these capabilities together in a 100% cloud-based property management platform designed for both commercial and residential real estate markets.

At the center of the platform is a unique data structure that places the lease document at the core of the workflow, allowing organizations to manage even complex agreements.

Sage Intacct Real Estate will help you:

  • Have the flexibility to accommodate a wide range of complex lease terms to maximize revenue
  • Gain greater visibility and control over your portfolio and lease agreements
  • Save time and reduce errors by eliminating manual data duplication

Real estate portfolios often involve multiple stakeholders, complex lease structures, and constant reporting demands. The right technology can simplify these processes and give teams the tools they need to manage properties more efficiently.

Make Property Management Easier Than Ever

Improve Transparency and Communication

Clear, accessible data is critical when managing properties and communicating performance with stakeholders. Sage Intacct Real Estate provides customizable dashboards that offer deeper insights into both financial and operational data across your assets.

Teams can generate financial statements and reports that keep property managers informed. Automated reminders also help ensure critical events—such as renewal options and lease expirations—are never overlooked.

Gain Flexibility and Control

As portfolios grow and leasing arrangements become more complex, organizations need systems that can scale alongside them. Sage Intacct Real Estate is designed to support that growth while providing powerful reporting functionality.

Intuitive data entry allows users to manage complex lease clauses, create custom reports, and generate invoices using flexible templates that support unique business needs. The result is a system that adapts to how your organization manages leases, tenants, and properties.

Manage the Complexities

Real estate portfolios often involve multiple tenants, units, and lease arrangements that can be difficult to track across disconnected systems. Sage Intacct Real Estate simplifies these processes by bringing everything into one centralized platform powered by real-time data.

Real estate organizations can manage multiple leases per tenant, multiple units per lease, or multiple tenants per lease within a single system. The platform can also automate management fee calculations and expense recoveries for common area maintenance and real estate taxes.

As real estate organizations grow, different teams need reliable information to make informed decisions and manage assets effectively.

Benefits for Everyone

No matter your role, Sage Intacct Real Estate provides deeper insight into the financial and operational health of your assets. With better visibility into performance, organizations can capture revenue opportunities, communicate results more effectively, and increase property and portfolio value.

  • Real estate owners and operators can increase asset value by capturing all revenue and monitoring spend, helping improve net operating income.
  • Executives gain a scalable solution that supports business growth, improves workforce efficiency with modern technology, and delivers powerful reporting for stakeholder communication—all while maintaining a lower total cost of ownership.
  • Property managers benefit from a centralized repository for lease information and easy-to-build dashboards that track financial and operational performance.
  • Accounting teams gain access to a robust accounting platform with streamlined reporting and best-in-class security.
Customizable dashboards provide deep insights on financial and operational data for your assets and allow key stakeholders to stay in the know.

Real estate organizations looking to modernize their property management operations don’t have to navigate the process alone. Our trusted team of Sage Intacct experts and real estate industry advisors help evaluate your current systems, identify opportunities for improvement, and implement solutions that provide greater visibility, efficiency, and control across your portfolio.

Contact us today.

Article Danielle Camara

The One Big Beautiful Bill Act (OBBBA), passed in July 2025, introduces changes to tax regulations that significantly affect real estate investors. One of the most important changes is the restoration of 100% bonus depreciation, making cost segregation studies an even more compelling tax strategy. 

What is a Cost Segregation Study and Why Consider It?

An investor can use a cost segregation study to allocate the basis of real property into specific asset classes, allowing for accelerated depreciation deductions for certain asset classes. In fact, any qualified improvement property or personal property will be eligible for 100% bonus depreciation, making it deductible in the year the property is purchased and placed in service. This includes building components and land improvements such as flooring, windows, fencing, and sidewalks. 

Quantifying the Impact

The example below illustrates the tax benefit of depreciation using a cost segregation study for a taxpayer who acquires a $3 million commercial property in 2025.

Tax Benefit without Cost Segregation:

  • Land allocation: $600,000 (not depreciable)
  • Entire building: $2,400,000 – depreciated over 39 years
  • Annual depreciation: $61,538
  • First-year tax benefit (37% bracket): $22,769

Tax Benefit with Cost Segregation and 100% Bonus Depreciation (Restored by OBBBA):

  • Land allocation: $600,000 (not depreciable)
  • Building allocation: $1,800,000 (39-year depreciation = $46,154 annually)
  • Qualified improvements identified by study: $600,000 (immediately deductible)
  • Total first-year deductions: $646,154
  • First-year tax benefit (37% bracket): $239,077

The restoration of 100% bonus depreciation and a cost segregation study transforms a $22,769 first-year tax benefit into a $239,077 benefit, more than tenfold increase. This example demonstrates how investors can accelerate depreciation deductions, reduce their tax liability, increase cash flow, and enhance overall return on investment.

Considerations in Advance

Before initiating a cost segregation study, taxpayers should evaluate their specific tax position and property characteristics to determine the eligibility and potential tax savings. They should also gather available property documentation, including recent appraisals, site maps or surveys, closing documents at time of purchase, and architectural or construction plans. 

Eligible Properties

Properties that are eligible for depreciation are eligible for cost segregation studies, including both residential and commercial properties. While this strategy can be applied broadly, it proves most effective on larger projects since the expected benefit correlates to the total cost of the project.

Timing the Study

Taxpayers can initiate a Cost Segregation Study at three key phases:

  • When purchased or constructed: Investors can commission a study on a newly acquired or constructed property. The study should be completed prior to the filing of the tax return for the year the property was placed in service, allowing for depreciation of the various components according to the classifications as set out in the study.
  • Retroactively: Investors can perform a study on properties placed in service in prior years. However, this requires filing a Form 3115 to claim the depreciation that would have been allowed. Note that bonus depreciation rates were less than 100% in 2023 and 2024, diminishing the benefits. 

In Summary

A cost segregation study is a strategic tax planning tool that allows real estate investors to accelerate depreciation deductions, resulting in significant tax deferrals and increased cash flow, particularly in the early years of ownership. It is especially valuable for newly constructed buildings, renovations, or acquisitions, and may also be applied retroactively. By front-loading depreciation, businesses can reinvest savings, improve ROI, and enhance financial performance.

To explore the applicability of this strategy to your specific situation, please contact Dean Dorton’s real estate team.

Article Dean Dorton

A cost segregation study is an analysis performed by trained professionals to identify property that should be classified as tangible personal property or land improvements, rather than real property that is depreciated over 27.5 or 39 years. This allows the taxpayer to identify property that can be depreciated over 5, 7, or 15 years instead of the 27.5 or 39 years that typically apply to real estate. This acceleration of deductions results in substantial tax savings benefits.

Cost segregation studies apply to both newly acquired or constructed property, leasehold improvements/fit-ups, and property that was placed in service in prior years (post 1986). For property placed in service in prior years, the IRS allows a “catch up” deduction in year 1 for the additional depreciation deductions that are identified in a cost segregation study that you were entitled to but did not claim in previous years. This can generate substantial tax savings in the first year of the study.

There is no limitation on the cost of property that is eligible for a cost segregation study. The benefit of a study for a smaller building will be less than that of a larger property, but may still be beneficial. We have worked with several industries to provide cost segregation studies including auto dealerships, banks, commercial and residential property owners, medical facilities, and manufacturing facilities.

Bonus depreciation and Section 179 expense elections allow taxpayers to write off 100% of qualified tangible property with a recovery period of 20 years or less. Thus, the 5, 7, and 15 year property that is identified in a study may qualify for this additional depreciation deduction that wouldn’t normally be identified if the property was being depreciated over 27.5 or 39 years. These tax incentives for 2022 make cost segregation studies even more beneficial for the current tax year as it applies to both newly constructed and existing properties. Similar tax incentives are also available for property placed in service in tax years 2008-2021. After 2022, bonus depreciation begins to phase out, with qualifying property getting an 80% bonus deduction in 2023 and reducing by 20% each year following 2023 until it sunsets in 2027.

One of Dean Dorton’s most recent cost segregation studies was performed on a $13.5 million retail shopping center purchased in 2021. That study generated $1,168,876 of tax savings in the first year. The present value of accelerated deductions (discounted at 7%) exceeded $722,032. The return on investment for this study was 95.5 to 1.

Dean Dorton uses an Indianapolis-based engineering firm to provide cost segregation studies to our clients. This engineering firm conducts studies that conform to the Cost Segregation Audit Techniques Guide issued by the IRS. They have reviewed over $3.8B of assets and have increased cash flow of over $300M. They have successfully defended all challenges brought forth by the IRS.

We work in tandem with your CPA, whether you are served by a large international firm, a regional firm, or a local accountant, to serve your best interests and save you money.

Brandi Gillen, CPA
Tax Associate Director
bgillen@deandortonstg.wpenginepowered.com • 859.425.7678

Article Dean Dorton

Written by Kaydee Ruppert, Accounting and Financial Outsourcing Manager

One of the greatest compliments that I’ve ever received was this – “You brought a humanity to our accounting department that I didn’t know could exist.” Wow was I floored! Even though I’ve moved away from that workplace, as I work with new clients, I carry a commitment with me to not let that guy down. Leading an exceptional accounting/business function and being viewed as human should not be mutually exclusive!

People who are drawn to nonprofit organizations tend to put their hearts and souls into their work. We challenge ourselves daily to find better ways to advance the mission and make a difference. This common mission is our compass, providing direction as we conduct the business of our organization. We all have this in common and that’s a powerful truth to keep front of mind. When frustration creeps, remembering that we stand on this significant plot of common ground can make all the difference.

The accounting/business function should be like air for your organization. It’s necessary, life-giving, and can even be refreshing. If the air is stale and distracting, it’s difficult for the people in the room to give their best attention to the mission. Accounting information should be simple, straightforward, and relevant to your organization. As accounting and finance people, it’s our job to listen actively and unobtrusively to the whole room and open windows as needed, even before we’re asked to do so. With the financial basics taken care of, leadership can focus on strategy and outcomes instead of compliance.

A common problem in nonprofit accounting is clutter. Many nonprofit organizations don’t have the budget to ideally staff a best-practice accounting department, so instead, they tap individuals better suited for program or admin work to perform multiple roles. These individuals do the best they can, but often create financial reports akin to indecipherable hieroglyphics. Make time at regular intervals to step back and ask yourself if your financial process is effective for the leaders in your organization. Is your accounting function supporting your organization’s management, or are you expecting management to bend to the accounting function?

Managing the calendar is a challenge for us all, but follow through is an essential component in trust. Reports need to be available when their users need them, not when it’s most convenient for the accounting team. Identify the barriers to follow-though and tackle them systematically. Simple recognition of the importance of being dependable goes a long way in the authentic development of a team.

Inevitably we all make mistakes, we all miss deadlines, and we all occasionally miscalculate the importance of an ask to the person doing the asking. When this happens, biology takes over and suddenly you’re enveloped in “fight or flight” adrenaline. Pause, but don’t freeze. Resist becoming defensive or burrowing into your office shell. Seize on these situations as opportunities to demonstrate humility and your commitment to continuous improvement. Be quick to apologize and eager to learn. That vulnerability is exactly what makes us human. And once you’re assured status in the human race, you’ll have a much easier time getting things done well!

I would love to talk to you about your accounting and finance function. I have over 25 years of accounting, finance, and administrative leadership experience in the nonprofit sector. It is my passion and I’m here to help.

As a manager in Dean Dorton’s Financial & Accounting Outsource team, Kaydee Ruppert puts the humanity in accounting for numerous nonprofit organizations and ensures they have the financial data they need to advance their missions in our communities.

Kaydee Ruppert, CPA, MSA
Accounting and Financial Outsourcing Manager
kruppert@deandortonstg.wpenginepowered.com • 859.425.7730

Article Dean Dorton

The fifth and final installment is somewhat of a smorgasbord of information that is relevant to the real estate industry, but not as tax law intensive as our previous installments.

Like-kind exchanges

Previously, taxpayers could elect to defer gains on the sale of assets used in a trade or business by making a qualified like-kind exchange (LKE), and following specific guidelines issued by the IRS. After December 31, 2017, LKEs are limited to real property not held primarily for sale, and tangible personal property no longer qualifies. While this seems like great news for those in real estate, it may add levels of complexity related to transactions in which there were previous cost segregations that pulled out tangible personal property from the purchase or construction of a building. Buyers and sellers may consider allocation of purchase price to interior items more closely, as it is possible there may be assets included in the sale that do not qualify for a like-kind exchange.

Rehabilitation credit

Under prior law, there was a 20% credit for qualified expenses to certified historic structures or structures in certified historic district, and a 10% credit for expenses related to a qualified rehabilitated building, subject to specific rules and reporting requirements.

Under the new Tax Cuts and Jobs Act, for amounts paid and incurred after December 31, 2017, the 10% credit is repealed, and the 20% credit is only eligible for certified historic structures. There is a transition rule for buildings that were owned prior to January 1, 2018 that may have qualified under the old law.

Qualified opportunity fund deferral of income

A new gain deferral was created by the new Act. Effective December 22, 2017, there is a temporary deferral from inclusion in income for gains that are reinvested in a “qualified opportunity fund” (QOF), and a permanent exclusion of gains on the sale of an investment in a QOF.

A qualified opportunity fund is an investment created for the purpose of investing in qualified opportunity zone property, and at least 90% of the assets in the fund is qualified opportunity zone property.

The Act designates certain low-income community population census tracts as qualified opportunity zones. Once designated, it remains in effect until the end of the tenth calendar year beginning on or after designation. A list of the census tract zones is located at https://www.huduser.gov/portal/sadda/sadda_qct.html.

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