Real Estate Tax Attorney

Experienced Real Estate Attorneys for Federal Compliance and IRS Defense

**Attorney Alina Veneziano**
Real Estate Tax Attorney & CPA Team Lead

**Alice Campbell**
Real Estate Tax Team
Former Special Agent (IRS)

Investing in real estate provides various opportunities to achieve substantial federal tax savings. However, due to widespread fraud, abuse, and misconceptions about the deductions and credits that are available, the IRS prioritizes enforcement of taxpayers’ real estate-related tax obligations. As a result, audits and investigations are common; and, even when taxpayers have prioritized compliance, they must work with experienced real estate taxation attorneys to make sure they do not face unwarranted liability for back taxes, interest, and penalties.

We assist U.S. taxpayers with all federal real estate tax law matters. If you have questions about real estate tax planning compliance, our lawyers can assist with implementing a tax mitigation strategy that complies with the Internal Revenue Code. If you are facing an audit or investigation, we can deal with the Internal Revenue Service (IRS) or IRS Criminal Investigation (IRS CI) on your behalf. We handle matters involving residential, commercial, and industrial real estate in the U.S. and abroad, and we provide advice and representation based on our clients’ specific risks and needs.

Federal Real Estate Tax Compliance

To leverage the various real estate-related credits, deductions, and other benefits available under the Internal Revenue Code, U.S. taxpayers need to develop and implement strategies that are custom-tailored to their specific circumstances. This includes the nature of the assets they own (or intend to acquire), the transactions they have closed (or intend to close), and their other federal tax obligations. At Oberheiden P.C., we provide custom-tailored federal real estate tax compliance advice and representation for matters including:

1031 Exchanges (Like-Kind Exchanges)

Section 1031 of the Internal Revenue Code allows U.S. taxpayers to indefinitely defer recognizing gain on transactions involving “like-kind” property. With the exception of real estate in foreign countries, nearly all types of real estate held for business use or investment quality as “like-kind” with one another under Section 1031; and, as a result, taxpayers can use Section 1031 to achieve significant tax savings in a wide range of circumstances.

With that said, the IRS also carefully scrutinizes taxpayers’ use of Section 1031 in many cases. Strict deadlines and other rules apply, and even minor technical violations of Section 1031 can render transactions ineligible for like-kind exchange treatment. With that said, there are options for effectively expanding the scope of Section 1031 as well (i.e., through reverse or delayed exchanges), and our real estate tax lawyers are well-versed in all of the options that are available.

Conservation Easements

The Internal Revenue Code allows real estate owners to claim charitable deductions when they grant qualifying conservation easements on their property. However, conservation easements have also come under scrutiny from the IRS in recent years, and the IRS now labels conservation easements as possible abusive tax avoidance transactions. As a result, taking an informed approach with the help of an experienced property tax attorneys is key for taxpayers who are considering conservation easements as a tax mitigation strategy.

Environmental Cleanup

The Internal Revenue Code also allows businesses to claim deductions when they perform environmental cleanups in certain circumstances. Here too, however, businesses need to be very careful to ensure that they comply with the law—and that they are prepared to affirmatively demonstrate compliance to the IRS when necessary.

Installment Sales of Real Estate

As the IRS explains, “[a]n installment sale is a sale of property where you receive at least one payment after the tax year of the sale. . . . you report part of your gain when you receive each installment payment.” As the IRS also explains, if a real estate transaction qualifies as an installment sale, gain from the sale “must be reported under the installment method unless” the taxpayer affirmatively elects out or is not a qualified accrual method taxpayer. Real estate clients must carefully report their gains and losses from installment sales on their returns, and they must be prepared to provide supporting documentation to the IRS for tax benefits when necessary as well.

International Real Estate

International real estate transactions can trigger a variety of reporting and payment obligations for U.S. taxpayers. Along with reporting gains or losses from international real estate transactions, U.S. taxpayers may also need to report their foreign real estate holdings to the IRS to comply with the Foreign Account Tax Compliance Act (FATCA). Our real estate tax attorneys work with taxpayers residing in the U.S. and abroad to help them meet their international real estate tax obligations.

Investment Property Income and Deductions

Real estate investors must carefully report their property-related income and deductions to the IRS. This includes both rental income and income from divestitures (though sales may be eligible for tax deferral under Section 1031), and it includes all relevant property-related expenses. However, real estate investors must be careful to avoid claiming improper deductions as well, as improper deductions are red flags for the IRS that can lead to invasive audits and high-risk investigations.

Mortgage and Home Equity Loan Deductions

The federal tax rules regarding mortgage and home equity loan deductions are much more complex than most people realize. The IRS has published a list of FAQs on its website; and, while these provide some helpful tips, they only scratch the surface of what taxpayers need to know. However, as with all federal tax matters, this complexity is not an excuse for non-compliance, and improperly claiming mortgage or home equity loan deductions can expose taxpayers to significant liability.

Rehabilitation Credits (Historic Preservation)

Section 47 of the Internal Revenue Code provides a tax credit of up to 20 percent of qualifying expenses for historic real estate rehabilitation. Commonly known as the historic preservation credit, this credit is also subject to stringent restrictions and requirements. As the IRS briefly explains online, rehabilitation “includes renovation, restoration, or reconstruction of a building, but doesn’t include an enlargement or new construction.” Of course, the lines here are not necessarily clear, and this is one of several aspects of Section 47 that can make compliance difficult.

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

Government Consultant

Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

IRS Audits and Investigations Targeting Real Estate Tax Issues

In addition to assisting U.S. taxpayers with federal real estate tax compliance, we also provide representation for IRS audits and investigations targeting real estate tax issues. These audits and investigations can present substantial risks—including risks for criminal tax fraud and tax evasion charges in some cases.

If you have received an audit notice, target letter, subpoena, search warrant, or any other demand for information or access to your (or your company’s) financial records, it is important that you speak with an experienced real estate tax lawyer immediately. You need to ensure that you are making informed and strategic decisions; and, while you must comply with the IRS’s demands to an extent, there are limits to the agency’s authority. Our real estate tax lawyers rely on extensive experience—including prior experience investigating and prosecuting federal tax crimes at the U.S. Department of Justice (DOJ)—to provide effective representation in high-stakes matters including:

IRS Real Estate Tax Audits
IRS CI Investigations
Federal Grand Jury Subpoenas
Real Estate Tax Evasion and Tax Fraud Prosecutions
Real Estate Tax Appeals Involving Audits and Collections

FAQs: Real Estate, Taxes, and the IRS

Do I Have to Pay Federal Income Tax If I Sell One Property to Buy Another?

Whether you have to pay federal income tax when you sell one piece of real estate to buy another depends on the circumstances involved. For homeowners, the Internal Revenue Code provides an exemption for the first $250,000 of profit ($500,000 for married couples filing jointly) in many cases of capital gains tax. For investment properties and business real estate, Section 1031 of the Internal Revenue Code allows for indefinite deferral of tax liability when conducting a compliant like-kind exchange.

What Are Some of the Most Common Real Estate Tax Issues During IRS Audits?

Some of the most common real estate-related tax issues during IRS audits include failing to report taxable income, inflating losses, and improperly claiming credits and deductions. These issues—among many others—can expose both individual and corporate taxpayers to substantial liability for back taxes, interest, and penalties.

Do I Need to Report Offshore Real Estate Holdings or Transactions to the IRS?

As a general rule, U.S. taxpayers must report all taxable transactions (including real estate dispositions) to the IRS. Under FATCA, U.S. taxpayers must report their offshore holdings to the IRS (subject to minimum thresholds) on an annual basis as well.

What Are the Penalties for Claiming Improper Real Estate Tax Credits or Deductions?

Improperly claiming real estate tax credits or deductions can expose U.S. taxpayers to civil penalties—and these penalties can be up to 25% of the amount owed in some cases. In cases involving intentional real estate tax evasion and tax fraud, taxpayers can face criminal fines and federal prison time.

When Should I Talk to a Real Estate Tax Attorney?

We recommend talking to a real estate tax lawyer any time you have questions or concerns about your federal tax obligations, or as soon as you receive contact from the IRS or IRS CI. Each type of real estate transaction has different tax obligations whether it’s joint ventures, office buildings, or development projects. Real estate-related noncompliance with the Internal Revenue Code can have significant risks, and engaging an experienced attorney is a key first step toward managing these risks as effectively as possible.

Speak with a Real Estate Tax Lawyer in Confidence Today

If you would like to speak with a senior real estate tax attorney at Oberheiden P.C., we invite you to get in touch. Please call 888-680-1745 or contact us online to arrange a free and confidential consultation.