In 2019, as part of its strategic plan to make industry-specific teams more structured and intentional, The Bonadio Group formally formed a firm-wide real estate practice. Nancy Cox, a partner in the firm’s Buffalo office provides oversight to the team which is made up of 25 professionals throughout all geographies and includes all areas of expertise, such as transaction and finance advisory, tax incentives and credits, cost certifications, opportunity zones, aggregation rules, Tax Cuts and Jobs Act (TCJA) planning, advisory and consulting related to 163(j) and 199(a), cost segregation studies, energy consulting, 179D analysis, & more.
We sat down with Nancy to learn more about the unique aspects of providing accounting services for the real estate industry and how The Bonadio Group is helping its clients grow.
Q: How is this team different compared to how The Bonadio Group was servicing real estate clients previously?
A: I wouldn't say that it’s changed how we service our clients. Rather, developing an industry-specific team ensures we've identified the firm's subject matter experts and resources so that we can easily find answers to any issues that arise and deliver our value proactively. We have a lot of depth and expertise throughout the firm, so this strategy brings our “Big Firm Capabilities/Small Firm Personality” to the forefront.
Q: Why is it so important to focus on industry verticals?
A: Given the increased complexity surrounding financial reporting and tax matters, not to mention economic pressures felt by the industry, leveraging our experts allows us to serve a broader audience by using our people compliment more effectively. Rather than trying to learn everything, we've identified strengths within our team members in order to really dig deep into various matters impacting our clients. That way, our team works very collaboratively, sharing ideas from client experiences, and information learned at various trainings, trade shows and presentations.
Q: Who makes the ideal real estate client?
A: Our ideal real estate clients are those who are actively engaged in (or looking to the future for) growth, geographical advancement, investment/portfolio mix, and perhaps innovation. We want to be viewed as an advisor helping clients achieve their goals – working together with businesses to help minimize risk and maximize strategy. We want to help our clients grow!
Q: What are the key issues and needs in the real estate industry?
A: It varies as the real estate industry is so diverse. Developers are key to a successful community and we want to ensure that they understand the tax benefits they can receive. Whether it be through tax credits, cost segregation studies, or accelerated depreciation options – educating them on what is out there is important. We like to be involved with our clients from the beginning when they are structuring a deal in order to maximize tax strategy, including an exit strategy if that is a consideration.
Cash flow and liquidity is always at the top of mind so that they can continue to develop the community.
Q: What are some trends you anticipate seeing in the industry in 2020?
A: Based on everything we've seen and heard recently, development won’t slow down any time soon. There are companies who are willing to make big investments in our communities and they need places for potential employees to live. Younger professionals want to live in communities that are growing and have interesting things to offer. They want all their needs met in their community, so development won’t stop at apartment complexes.
Q: Are there any new laws or regulations impacting the industry?
A: Yes! Since the passing of the Tangible Property Regulations in 2014, all the way up to the TJCA in 2017 and the 2020 Extender Act, Congress and the IRS have passed over 3,000 pages of law and regulations that affect the real estate industry. Many of these changes generate tremendous savings opportunities, while there are other changes that create headaches if not properly planned for or avoided.
There are currently proposed regulations at the state level that could really impact the development community, such as the prevailing wage. Voters should educate themselves on these issues and ensure they understand how they will impact the communities they call home. As far as the latest new laws – the biggest buzz in the real estate community as of late has to do with Opportunity Zones. We have experts that have invested significant time into reading, understanding and applying the new law.
Q: Why now and what are the team’s long-term goals?
A: Real estate developers and owners need better tax and accounting guidance now more than ever, including planning assistance right from the beginning of their projects, to take advantage of all the law changes. The Bonadio Group team knows the law – we have been regular commentators to the IRS regarding proposed regulations affecting the real estate industry since 2012. We have been hired by real estate groups to submit commentary on their behalf to the IRS, and we've even written published books on real estate income tax subjects.
Our long-term goal is to be known as the preeminent CPA and consulting firm servicing the real estate industry in the Northeast. Overall, our ultimate goal is, and will always be, to work with our clients to grow and meet their goals, while we continue to grow with them. Questions? Reach out to our experts at The Bonadio Group today to discuss.