'This Is All We Do': How CRE Owners Can Unlock Savings With Tax Incentives

Most business owners and investors are familiar with taxes and the nuances of federal tax laws that govern business activities. While navigating the intricacies of the United States tax code can be daunting, owners and investors can turn this challenge into an opportunity, especially now in the market cycle when everyone is looking for cost savings, says CTI Managing Director of Business Development Carrie Gibson.

CTI is a tax consultancy firm that specializes in guiding businesses through the varied processes of applying for energy-related tax programs, including Cost Segregation, Section 45L Energy Efficient Home Credits and Section 179D Deductions for Energy-Efficient Commercial Buildings. CTI has helped commercial real estate owners across the U.S. unlock hundreds of millions of dollars in tax savings due to the experienced professionals available to assist owners with maximizing benefits.

“These tax incentive programs are underutilized because they are misunderstood, which results in folks leaving money on the table,” Gibson said. “Property owners and investors can access tax incentives they might not even be aware of that can significantly lower their tax payments. By engaging a third-party tax expert adviser to work alongside their certified public accountants, owners will greatly enhance their tax resources and savings.”

While CRE owners may think that a CPA is the go-to person for all their tax needs, CPAs may not have the particular expertise needed to navigate all the complexities of accessing these specific tax incentives.

“There are so many federal and state tax programs out there, making it difficult for a CPA to wrap their arms around every program available for their clients,” said CTI Managing Director of Energy Initiatives Marcus Corral. “We help identify the niche programs that apply to a given CRE owner’s unique situation.”

CTI educates its clients and their CPAs on the existing programs that fit their needs and walks both parties through effective implementation of them while unlocking savings.

CTI professionals have varied backgrounds and educational experiences, ranging from attorneys to engineers, and have extensive and ongoing experience working with CPA firms. CPAs often reach out to CTI to verify if an incentive or deduction might be applicable to their client, Corral said. 

“CPAs feel comfortable recommending us because of our established reputation for quality work,” Corral said. 

Wary of Complexity

One tax incentive, Cost Segregation, is a tax planning tool that allows property owners to accelerate depreciation on certain building components, resulting in tax deferrals and increased cash flow.

“Quite often, clients have simply never heard of cost segregation and that’s why they aren’t taking advantage of this particular tax incentive,” said CTI Director of Cost Segregation Bill Mark. “Or clients who use a conservative rule-of-thumb approach to their taxes pre-judge the idea of cost segregation, deeming it too good to be true.”

In reality, cost segregation is a tax concept dating back over 70 years and is widely accepted by the IRS.

“Other clients aren’t conservative, just wary of complexity,” Mark said. “They assume, incorrectly, that it’s going to take up too much of their time and effort when, in reality, all we need from them is a few documents and help scheduling a site visit. We handle the rest.”

These programs are constantly evolving, so clients may only be aware of an old definition that prompts them to assume that a program doesn’t apply to them. 

“Because we’ve built an entire practice advising on just this handful of energy-related incentives, we have the most up-to-date knowledge that enables us to determine who is a good candidate for these programs,” Gibson said. “Plus, we have a good sense of the workload that will be required for each client to access each incentive.”

For CTI, supporting their clients and their clients’ CPAs on the tax credit and incentive process is an end-to-end service.

“This is all we do,” Corral said. “We substantiate everything, we document every aspect to ensure each client is complying with current IRS rules and standards, easing any audit concerns at the beginning of our engagements.”

Engineering Expertise Required

Many of the studies that CTI conducts require technical engineering expertise specific to real estate, dealing with niche industry issues a finance-focused tax professional may not be familiar with. 

“Our staff is drawn from the industry,” Corral said. “We speak the same language as our clients while having an understanding of the tax code and how it all ultimately applies to them.”

CTI’s engagement always begins with a free initial consultation, including a fact-gathering phase. Once CTI determines there is an opportunity to be pursued, the firm’s professionals engage the client and put together an initial estimate of benefit for the client, Mark said. For purposes of Cost Segregation, CTI provides a preliminary estimate before engagement based on initial property and financial information. If the client chooses to engage with CTI based on that estimate, the next step is a site visit.

“We conduct a physical inspection of the property, take photos, make notes and document everything so that we can properly separate real property and personal property,” Mark said. “That’s when the engineering analysis kicks in. It takes about four to six weeks to conduct the analysis and put it through our own rigorous quality control process before putting together the final deliverable for the client and their CPA.”

Substantiating The Conclusions

CTI delivers a final support package at the end of the study process that provides the substantiation behind the firm’s tax benefit determination. This report tells the story of how the client qualified for the program and, importantly, in the manner the IRS expects to receive the information.

“In addition to helping the taxpayer properly substantiate the claim, we provide the pro forma reporting that’s necessary for filing,” Corral added.

The sooner these studies can be conducted and incorporated, the sooner they can offset a client’s quarterly estimated tax payments, Gibson said.

“The best place for these incentives is on an originally filed tax return, so clients who are considering exploring these should reach out sooner rather than later,” she said.

To be sure, certain tax benefits like the Section 45L program require documentation – site inspections – during construction, Corral said.

“Once the drywall goes up, this is no longer something we can qualify a client for,” he added. 

This means accessing these programs can be time-sensitive. However, clients who approach their CPAs about these programs can now file for an extension for September or October of 2025, providing runway for CTI to advise on possible next steps.

“For 2024, it’s not too late,” Corral said. “This is something at which we excel and we’re here to help.”

This article was produced in collaboration between CTI and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.