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3 Lessons for Building Your Commercial Real Estate Practice Using 179D

Posted by Don Warrant on 11/4/14 9:38 AM

Create urgency through the potential loss of millions in tax deductions—and align with a strategic partner who can execute.

commercial_real_estateIn last week’s post, we shared the story of how a CPA firm lured back a $50,000-a-year client using the 179D Energy Efficient Commercial Building Tax Deduction to recover more than $1 million in taxes.

The even more exciting news? This is far from an isolated incident. In our work with CPA firms throughout the United States, we have uncovered opportunities just like this countless times, positioning those CPAs to delight their clients with lowered tax bills and greater cash flow.

Here are our top three takeaways about how you can use 179D to build your tax practice:

  • 179D opens doors. Let’s face it: “We do a better tax return” as a marketing message just doesn’t cut it anymore (if it ever did). What commercial property owners really want is to free up cash flow for more profitable use, and engineering-based tax incentives are an ideal way to put that cash back in their pockets. While it is currently expired, 179D deductions may be available for prior years—all the way back to 2006, in some instances. For owners of as hotels, office buildings, retail stores and manufacturing facilities that have required updates to improve their energy efficiency, that lookback can represent a tax deduction of millions of dollars. And since most CPAs don’t have the knowledge or the engineering talent to complete a 179D study, working with the right strategic partner and educating your prospects about this potential windfall could propel you to the front of the pack.
  • Benefits of association. You probably know that qualifying for the 179D deduction requires an independent certification by an engineer licensed in the state where your client is based. Perhaps this seems like an insurmountable hurdle, but it doesn’t have to be. As the CPA in our 179D case study discovered, aligning with the right strategic partner (hmmm... are you seeing a pattern here?) that has the proper resources and personnel can provide all of the business-building benefits of 179D without having to undertake the permanent overhead and risk of bringing those resources in-house.
  • Limited-time offer. Good business developers know the value of urgency. And if your clients or target prospects are architects who design public schools and government buildings, then you have an urgent message to deliver, because the lookback available to those designers is just three years. As of right now, only green buildings and retrofits for government entities and schools performed in 2011 and later qualify for the deduction. And once the 2014 tax return is filed, 2011 will be off the table. For some architects and designers, those missed tax deductions can add up to millions of dollars. Make sure the designers of public schools and government buildings in your target market know that every day they delay a 179D study increases the chances that they are letting money slip through their fingers.

CSP360 Deep Dive Program Here’s the thing about creating a sense of urgency: You have to be prepared to execute. Before you start singing the song of the potential tax benefits of 179D, make sure you have the right resources to deliver those benefits. A strategic partner such as CSP360 equips you with the engineering tools and expertise you need to confidently bring this tax-saving message to market and build your tax practice with progressive, growing commercial property owners and architects. Contact us to learn more about how we can help you spot 179D opportunities in your current client base and with your target prospects.

Tags: commercial real estate, Section 179D

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