Last Chance for 2017 Tax Moves

Many people would be surprised to hear how often we end up putting together transactions that save taxes for buyers and sellers in the last month of the year.  We have written contracts on Christmas Eve (once on the roof of a car), that holiday weekend, and even the week between Christmas and New Year's, with a closing that took place that same week!  Although everyone has the best of intentions not to procrastinate, things happen that are beyond one's control.  Often, it's a transaction that doesn't go through at the last minute, leaving a seller or buyer with no choice but to find another buyer or seller with no time to spare.

We certainly can't promise that every interested party will be able to complete a sale by the end of this month.  However, if you can pay cash, or take money back as a seller, and you are motivated, with a good support team to push through to a year-end closing, you just might make it happen.  Often such situations become infused with urgency at every turn, and can even overtake ones that started sooner.

So, if you have dreams of completing a transaction by December 31st, we're here to help!

Sometimes You Need a Real Estate Consultant

One of the mysteries about real estate brokerage to non-professionals is the way our business gets done.  Since we work mostly on commission, there seems to be no way around taking advantage of our services without paying us, in certain situations.  Don't worry, though--you can use us another way.  We can be hired, by the hour, to evaluate and price proposals for renewals and expansions, non-arms'-length transactions, and other deals out of the ordinary. Tenants who have options to extend or expand sometimes are inclined to do so, but would like to know what the current market conditions are for their type of space.  That's a perfect job for a real estate consultant, and it's much more upfront than calling us in, pretending to be moving, looking at several other spaces, and then disappearing.  We're OK with helping you to stay where you are, as long as we get paid for the expertise we provide, which, by the way, is usually worth quite a lot after concessions and work letters are factored into the equation.  So think about that, and call us with your questions.

Still Hovering in the Old Economy--Betting on the New Economy

Just when we think that the market is recovering, we get news, or statistics, that makes us wonder.  The last two months of almost constant snow have really put a crimp in real estate sales, although it is certainly possible that the market will recover with a vengeance in the spring.  Right now, we still see a lot of hovering, meaning that people are looking at space, sometimes even making offers, but not actually going through with many of the transactions. This is particularly true in the case of office space.

The exceptions seem to be new ventures, often for successful entrepreneurs who have other businesses or locations.  They know how to make a profit with what they do, and they have a formula to expand that will work.  Restaurants fall into this category.

The other type of new ventures are businesses in fields that have arisen due to market demand or governmental regulation, just like the old testing stations when the State enacted emissions testing.  Now it has more to do with regulated industries, or with niches within categories, such as food-related trends or technology start ups.  New ideas lead to new companies, and they often do things that didn't exist when we were growing up, as I often say about the jobs our children have.  Let's hope that they proliferate enough to make up for the downsizing in the office sector, and that they are successful beyond their wildest dreams!

Warning: Tax Changes Ahead

It's pretty clear that there will be tax increases in the future for investors and wealthy individuals.  While we know that what the candidates are proposing could change, we know that tax rates are likely to rise.

 What does that mean for commercial real estate?  Time to get moving!  A transaction that closes this year will result in lower capital gains taxes for sellers than they would be likely to get in 2013.  Buyers should be motivated to buy now, since they are likely to be able to get a better price if they are able to close by the end of this calendar year.

As we all know by now, it takes a lot longer and is a lot more difficult to close than it was in the good old days.  Therefore, even though we've just passed Labor Day, time is of the essence now. If you want to make sure that you close on a transaction this year, you'd better be watching the calendar closely, and not letting time pass while you ponder an offer.  It could cost you money in the near future.

A Challenge

We're having a little contest here at Pearce Commercial.  We just had an investment property close in 58 days from listing to transfer of title.  Since so  many commercial transactions are affected by tax considerations, and since many companies and individuals have calendar year tax periods, we know that there will be some among you who are going to want to complete a transaction before the end of 2011.  So, here's the challenge:  Can someone out there beat the 58-day record?  It may be that the clock has already started, because the property to be transferred may already have been listed.

There are 39 days, counting today (because there's plenty of time to act today!), left in 2011.  So use them wisely, and help us beat the current record holder.  Buy today-close in December!