Finding Gold in the New Repair Regs

allen seatedFrom Allen Gong, Supervising Senior Accountant at PP&Co.

The IRS regulations are an ever changing phenomenon in the world of real estate. Regulations can be puzzling for real estate professionals, owners, and the like, obscuring the path to maximizing tax savings. Recently, new repair regulations were finalized, further adding to the confusion. With that in mind, the Real Estate Group at Petrinovich, Pugh and Company, LLP (PP&Co) partnered with KBKG, Inc. to host “The Fix is In – Finding Gold in the New Repair Regulations”. The backdrop for the presentations was a rooftop ballroom at the beautiful Silicon Valley Capital Club in Downtown San Jose.

The event, held on October 1, 2014, attracted attendees from diverse business backgrounds including real estate, legal and banking. Guests were treated to sweeping views of the Silicon Valley, a stunning sunset, great food, drinks, networking and insight from our presenters, whose goal it was to help real estate owners and professionals make the best use of the new regulations.

David Doolin, Partner at PP&Co was the first to address the audience. David is a member of the Firm’s Real Estate Group, and is responsible for providing audit and tax services for closely held businesses and their owners and families.  David began by providing some background on the final tangible property regulations, which clarified a number of issues surrounding capitalizing or deducting expenditures related to building improvements and repairs. He then discussed the three safe harbors for deducting expenditures. Finalized in September of 2013, the safe harbors provide guidance on the overlying question of whether an expenditure should be expensed or capitalized.  In addition, David’s presentation touched upon how the new regulations provide parameters for deducting expenditures that fall outside of the three Safe Harbors, and concluded by discussing the methods and procedures used to identify assets that have been replaced by current capital expenditures.

Gian Pazzia, Principal at KBKG, and President of the American Society of Cost Segregation Professionals, concluded the presentations. Gian provided an overview of dispositions and using cost segregation to maximize the benefits of the new regulations. Gian is an expert in the repair vs. capitalization services and a recognized leader in the cost segregation field. His presentation addressed strategies that can be leveraged to take advantage of the new tax rules as they pertain to costs associated with retirements and dispositions of building property. He juxtaposed the previous rules with the new ones to clarify the changes and demonstrate how to use the new rules to their best advantage. Further, Gian illustrated how taxpayers can accelerate depreciation by using cost segregation studies to identify and allocate personal property assets into smaller buckets with shorter depreciation lives.

Following the presentations, both David and Gian were available to answer questions and discuss specific situations with attendees while appetizers were passed, wine was poured, and the sun descended slowly on the horizon. For more information on the new repair regs, or to speak with a real estate tax professional for help with your unique situation, contact David Doolin at or (408) 287-7911.