Ahhh, January 2018. New beginnings, an infant year and clear sailing ahead. Rather than focus on resolutions which many of us break before we habit writing the new date – 2018, let’s spend some time discussing the three things you should accomplish NOW – in January – with your commercial real estate.
Examine the new tax law! Run, don’t walk to your tax advisers office. That line you see protruding out the front door includes his clients with similar questions. Specific to your questioning should be “pass-through” entities and how your specific entity(s) is treated under the new tax plan which took effect on January 1, 2018. For certain LLCs, S-Corporations, sole proprietorships, personal service corporations, etc., there is a 20% tax deduction from the income the entity generates. Many, many commercial real estate ownership entities may be effected. Limits on the amount of qualifying income exist as well as the types of entities that apply, so plan on spending a couple of hours or so understanding the ins and outs.
Roof and Heating, Ventilating, and Air Conditioning. If you are a tenant, you may be responsible for the repair and maintenance of your roof and systems that heat and cool your building. As an owner-occupant, yes – you are responsible. The winter months are a great time to fire up that AC and see if there are any glitches. Waiting until the temps are sweltering is a bad time to realize your cooling is blowing hot air. SoCal will experience a relatively dry winter as La Nina conditions persist. Awesome, you say – no need to maintain or repair the roof with no rain in sight. Wrong! Santa Ana winds which accompany dry weather, blow all sorts of debris onto your roof. If the leaves, dirt, and other detritus are allowed to clog the down spouts – your roof will suffer when the rains return. Hot dry winter weather also causes the mastic around skylights to crack and peal – causing – you guessed it – leaks!
Leases, extension rights, loan maturities. The month of January is an appropriate time to grab a copy of that lease or mortgage papers and take a look. At the forefront of your perusal should be any expiration of your lease or extensions that must be triggered this year. Does your loan reach maturity in 2018? If so, now is a great time to re-finance that note.
A very Happy New Year to you all!