Question 1

What is a 1031 like-kind exchange and how much time do I have?

Accepted Answer

A 1031 exchange lets you defer capital gains tax when you sell investment or business real property and reinvest in like-kind replacement property. You have 45 days from the sale to identify replacement property and 180 days to close. A qualified intermediary must hold the proceeds, so the structure needs to be set up before you sell — not after.

Question 2

What is a cost segregation study and why does it matter?

Accepted Answer

A cost segregation study reclassifies parts of a building into shorter depreciation lives, letting you deduct them faster. Instead of depreciating an entire property over decades, components like fixtures, certain finishes, and land improvements can be written off over 5, 7, or 15 years. Combined with bonus depreciation, this front-loads deductions and improves cash flow in the early years of ownership.

Question 3

How should I structure entities for a real estate investment or fund?

Accepted Answer

Most real estate is held in LLCs or partnerships because they offer liability protection and flexible, pass-through tax treatment. The right structure depends on your investors, financing, and exit plans, and on how distributions and allocations are designed. We model waterfalls and special allocations so the entity structure supports the deal economics rather than working against them.

Question 4

What are the passive activity and real estate professional rules?

Accepted Answer

Rental real estate is generally treated as a passive activity, so losses can usually only offset passive income. If you qualify as a real estate professional under the IRS tests, those losses can offset other income instead. Qualifying depends on hours worked and material participation, and the tests are strict — documentation matters, so we help clients plan and substantiate their position.

Question 5

Do you handle HUD-financed and affordable housing properties?

Accepted Answer

Yes. We work with HUD-financed and affordable housing properties, including Section 232 compliance and LIHTC cost certification. These programs carry specific audit, reporting, and compliance requirements tied to the financing. We prepare the audits and financial statements lenders and program administrators expect, and help owners stay compliant through the post-closing life of the loan.

Question 6

Do you work with real estate clients outside Ohio?

Accepted Answer

Yes. Pease Bell is headquartered in Cleveland, Ohio and serves real estate clients in all 50 states. As a Top 200 U.S. CPA firm with 150+ professionals, we support owners, developers, and investors nationwide across acquisition, development, refinancing, and disposition — while keeping the direct partner access of a boutique practice.

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Industries: Real Estate