San Diego San Diego

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Real estate owners should pay close attention to the provisionsin the CARES Act. In addition to the major business fundingbenefits, there are several provisions that specifically benefitreal estate owners and investors, according to PhilJelsma, an attorney at Crosbie Gliner SchiffmanSouthard & Swanson. These benefits includes removinglimitations on net business losses, pass-through losses andqualified improvement on leasehold properties.

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In terms of net business losses, Jelsma, a partner at CrosbieGliner Schiffman Southard & Swanson, says, "The CARES Acttemporarily suspends the limitations on net business losses that anindividual can use to offset income from other sources. Initially,this was kept at $250,000 for a single household or $500,000 ifmarried filing jointly. The new law suspends this cap for tax years2018, 2019 and 2020."

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The 2017 tax legislation limited pass-though loss, but the CARESAct suspends that limitation as well. "The new measure also allowslosses from pass-through, such as LLCs and partnerships, to offsetother sources of income – suspending a new loss limitation," saysJelsma.

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The CARES Act also corrects an error in the 2017 tax legislationregarding qualified income improvements on leasehold properties."As a result of an error in the Tax Cuts and Jobs Act of 2017,these improvements went from being depreciable over 15 years to 39years," says Jelsma. "The CARES Act corrects this problem withqualified improvement property, which pertains to any leaseholdimprovements made to the interior portion of a nonresidentialstructure if the building has been a place of service."

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The solution is a technical correction to allow properties toimprove over 15 years, according to Jelsma, adding that it "allowsnot only these improvements to be depreciated over 15 years butpotentially expensed immediately under the bonus depreciationrules. This means that some real estate investors may amend their2018 and 2019 tax returns."

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.