Tax planning for real estate transactions and investment structures: 1031 like-kind exchanges, entity and holding-structure work, and the property tax assessment appeals, valuation disputes, and exemption applications that follow once the asset is owned.
Real estate carries two tax problems, and they run on different clocks. The first is the transaction. Once a sale closes, the gain is recognized, the basis is fixed and the chance to defer has passed; a Section 1031 exchange works only if it was arranged before that day. The second clock starts the year after closing: the assessor sets a value, and the bill follows.
The transactional work is done before signing. Who holds title, how the price is split between land and building, and whether an exchange is intended are settled in the contract. Land is not depreciable; the building is, over 27.5 or 39 years, so the allocation fixes the deductions for decades and the recapture at exit.
The recurring work is a valuation case with a deadline. Each assessing jurisdiction opens an appeal window of a few weeks, and a value not contested inside it stands for the year. Where a position is later examined, we coordinate with the firm's tax controversy practice, including in matters before the IRS.
Tax structuring for acquisitions, dispositions, and development, with purchase-price allocation, entity selection, and financing terms drafted into the deal so the tax treatment is fixed at signing rather than discovered after the close.
Structuring and execution of Section 1031 exchanges to defer gain on investment and business-use property, with identification periods, deadlines, qualified-intermediary arrangements, and property requirements managed so the exchange qualifies. Deferral is available only when the requirements are met.
Selection of the vehicle that holds the real estate, from a partnership or LLC to a corporation or trust, analyzed against the owner's objectives, financing, ownership profile, and exit, so income, depreciation, gain, and transfer are all treated as intended.
Challenges to over-assessed value through the local appeal process, from the assessor to the board of review and further levels where warranted, built on comparable sales, income data, or independent appraisal and filed within the jurisdiction's deadlines.
Development of the valuation case for residential, commercial, and industrial property, assembling the evidence and the appraisal record needed to show that an assessment overstates the property's true value.
Assessment of available property tax exemptions and preferential classifications, charitable, religious, governmental, agricultural, or owner-occupied among them, with the application and supporting record needed to claim and maintain them.
Formation and governance of the entities that hold and operate real estate, coordinated with the firm's corporate practice so the holding structure aligns with financing, liability, and the intended tax result.
Annual property tax compliance and recordkeeping, with representation where a real estate tax position is examined, coordinated with the firm's tax controversy practice, including matters before the IRS.
Whether an owner is a dealer or an investor turns on conduct: how often it sells, whether it subdivides, how it markets. A dealer's gain is ordinary income, cannot be deferred in an exchange and cannot use the installment method. A developer who also holds rentals uses separate entities for each.
The exchange agreement and the qualified intermediary have to be in place before the relinquished property closes. If the seller takes the proceeds, even for a day, the exchange fails and the gain is recognized. The intermediary cannot be the seller's attorney or accountant of the prior two years.
Replacement property is identified in writing within 45 days: up to three properties of any value, or more if their combined value stays within 200 percent of what was sold. Cash taken out or debt not replaced is boot and is taxed. The exchange closes within 180 days.
An assessment can be attacked on market value, with comparable sales or the property's own income, or on uniformity, by showing that like properties nearby carry lower values per square foot. Mass appraisal produces both kinds of error. The evidence is gathered before the window opens, not after.
A charitable, religious or agricultural exemption attaches to the use of the property, not to the owner's tax status, and many jurisdictions require an application and then an annual affidavit. A change in use midyear, such as a lease to a for-profit tenant, can forfeit it for that year.
The closing statement, the appraisal that supports the land and building split, and the Form 8824 reporting an exchange are the record an examiner asks for years later. A cost segregation study that moves components into shorter recovery periods belongs in the same file, engineer's report attached.
Before terms harden, the vehicle, the purchase-price allocation, and the financing are drafted into the agreement itself. If the disposition is meant to defer gain, the deal is built from the outset to satisfy Section 1031's requirements, with the qualified intermediary in place before closing.
Once the relinquished property closes, the statutory clock governs: replacement property identified within 45 days, the exchange completed within 180, proceeds held by the intermediary throughout. We run the calendar and the paper so qualification is documented rather than hoped for.
Ownership brings the recurring problem. Each year the assessor sets a value, and that value can be wrong. We test it against comparable sales, income data, and appraisal evidence, and decide if the number is supportable or worth contesting.
Where the assessment overstates value, the valuation case goes to the assessor and board of review, and further where warranted, filed within the jurisdiction's deadlines, with a record that will hold if the position is later examined, including before the IRS.
A building is taxed once when it moves and again every year it stands still.
It is a sale and a purchase treated as one transaction, so the gain on the property sold is carried into the property bought rather than taxed now. Since 2018 only real property qualifies, and it must be held for investment or for use in a business; a residence or inventory held for resale does not. The seller never touches the proceeds. A qualified intermediary holds them, replacement property is identified in writing within 45 days, and the purchase closes within 180 days of the first sale. Cash kept back or debt not replaced is taxed as boot. The deferred gain is not forgiven; it reduces the basis of the new property and surfaces on a later taxable sale.
Most investment real estate is held in a limited liability company taxed as a partnership, because income, depreciation and gain pass through to the owners once and, with a Section 754 election in place, the property's basis steps up to market value when an owner dies. A C corporation taxes the same gain twice and offers no step-up on the real estate itself, which is why appreciating property rarely belongs in one. A trust adds a succession layer without changing the income-tax picture if it is drafted as a grantor trust. The structure also governs a later exchange: a partnership can exchange, but individual partners who want to go separate ways cannot, so an exit plan is written into the operating agreement at formation.
Property is taxed on its assessed value, and an assessment that overstates value can be challenged through the local appeal process. An appeal typically requires evidence, such as comparable sales, income data for income-producing property, or an independent appraisal, presented within the jurisdiction's deadlines and procedures. We evaluate how supportable the assessment is, assemble the valuation case, and pursue the appeal through the assessor, board of review, and, where warranted, further levels of review.
Exemptions and preferential classifications vary by jurisdiction and by the use of the property, for example certain charitable, religious, governmental, agricultural, or owner-occupied uses. Eligibility turns on the specific statutory criteria and on documenting that the property and its use qualify. We assess which exemptions or classifications are available and prepare the application and supporting record needed to claim and maintain them.
Because the three decisions that set the tax result are contract terms. The purchase agreement fixes the allocation between land and building, which governs depreciation for the life of the holding. The exchange documents and the qualified intermediary must exist before the relinquished property closes, since a seller who receives the proceeds has ended the exchange. And the entity that takes title is named on the deed, so it has to be formed and funded before the closing date. Each of these can be set up in the week before signing, and almost none of them can be repaired afterward.
Yes. We represent property owners in assessment appeals and valuation disputes before local assessors and boards of review, and we coordinate with the firm's broader tax controversy practice where a matter involves the IRS or other authorities. We maintain a clean, well-documented record from the outset so the positions taken are defensible if a filing or assessment is later examined.
Tax structuring for business combinations and asset acquisitions, including the real estate that often sits inside a deal, drafted into the terms before the form is fixed.
Explore →Multi-state compliance, nexus analysis, and state and local tax controversy, the regime in which most property tax questions live.
Explore →Estate and gift tax planning and wealth-transfer strategy for real estate held in trust or passed across generations as part of a larger plan.
Explore →Representation in IRS examinations and federal tax controversy, coordinated with property tax appeals where a real estate position is challenged.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
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