Tangible Property Regulations (TPR):
Benefits of TPR:
- Increased write-offs, lower basis, reduced depreciation recapture, and expense up to 80% of CapEx.
- Unlike depreciation, which is recaptured and taxed at a 37% federal income tax rate upon sale, TPR expensing offers a permanent tax write-off. The longer you have owned a building, the greater your TPR tax benefit.
- Offer clear guidance on property improvements that can be expensed instead of capitalized and depreciated, allowing for immediate write-offs on many depreciated items.
- Identify previously capitalized expenses that are now being depreciated. Cleaning up or scrubbing a depreciation schedule can generate substantial tax savings.
Applications of TPR:
All commercial property types:
- Office, retail, industrial, multifamily, hotels & hospitality, mixed-use & special purpose.
- Properties must be owned for at least 5 years and valued at over $10 million. Can also do , TPR on properties Sold or exchanged under 1031.
- Often combined with a Cost Segregation study to maximize tax savings.
IRS Risks & High Costs of Non-Compliance with TPR
- The IRS requires that Depreciation Schedules be scrubbed annually of improperly capitalized items by doing a TPR review.
- •Non-compliance may cause the IRS to reject depreciation claims, resulting in significant financial losses, penalties, interest charges, audits, investor lawsuits, and loss of reputation.
- Want proof? Download the 265-page IRS TPR Guide for IRS Auditors from the IRS website.
TPR software coming soon...
- We are also developing AI to deliver these services faster and more affordably to our Real Estate owners and their CPA/Tax Advisors shortly.
- When it is available, our existing clients will receive preferred pricing.