This Commercial Real Estate issue contains the following articles: How to Minimize Your Property Taxes, Congress Permanently Extends Several Tax Provisions Important to Real Estate Industry, Crowdfunding - The Ultimate Flexibility and Cyber Risk - Now, It IS the Daily News.

1. HotTopics
CommercialRealEstate
Reduce Taxes. Maximize Cash Flow. Minimize Risk.
JANUARY 2016 | ISSUE NO. 02
HowtoMinimizeYourPropertyTaxes
P
roperty taxes are not like income taxes in that there’s no schedule to follow to
determine your tax liability. Taxing jurisdictions are responsible for assessing the
value of real property for tax purposes, and what that assessment entails will
vary. In 49 of the 50 states, property taxes are based on fair market value, that is, the
price for which the property would sell in its market. Most states include both the cost
it would take to replace the building and the property itself in the assessment.
Any owner of real property should consider whether they should have a property value
analysis. Reassessments are generally completed on a mass scale using a computer-
automated system. As such, the assessment may not reflect the particulars of the
property. Property values are generally not determined by walk-throughs, so the overall
conditions of the building and economic factors may not be considered. To determine
if you would qualify for an assessment reduction, carefully examine your property and
consult with a qualified expert to ensure the assessed value is accurate.
Crosscheck with Peers
The process for reassessing the value of your property starts with your current property
tax assessment. Many of the records are available from the county assessor’s office.
Find out what the state has determined your property is worth, and then verify that the
number mirrors the price set for similar types of property. Property tax assessments
are public record, so you should be able to find property tax assessments for locations
(Continued on page 2)
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CBIZ’s Real Estate practice is
uniquely positioned to help you
minimize risk and capitalize on
market opportunities.
We work with owners, managers,
operators and investors, as well as
commercial real estate developers
and partnerships in all of the major
CRE sectors: retail, office, hotel,
multi-family, shopping centers and
real estate investment trusts.
FINANCIAL SERVICES
INSURANCE SERVICES
VALUATION SERVICES
IN THIS ISSUE:
How to Minimize Your
Property Taxes
PAGE 1
Congress Permanently
Extends Several Tax
Provisions Important to
Real Estate Industry
PAGE 2
Crowdfunding - The
Ultimate Flexibility
PAGE 4
Cyber Risk - Now,
It IS the Daily News
PAGE 5
CBIZ BizTipsVideos@cbiz

2. PAGE 21-800-ASK-CBIZ • www.cbiz.com/CommercialRealEstate CBIZ BizTipsVideos@cbiz
DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional
advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader
is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in
connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that
could affect the information contained herein.
with similar features to yours. A third party can help you
aggregate data to determine if comparable properties
have lower assessed values. This step is important, as it
will be a key piece of the case for lowering your property
tax liability.
Assess the Assessment
Checking your value against those of peers will not
be enough, as every property is unique. You need to
be thorough in assessing the information covered in
the current assessment of your property to determine
whether the information is accurate. Is the square footage
correct? Are the key features of the building included in
the results?
Next, take a fine-tooth comb to your property to determine
if the units of property that have the potential to lower
your liability are being considered. Identify units of
property that have depreciated, such as roofing, elevators
or air conditioning units. Also factor in whether pieces of
the property have been damaged due to flooding, hail or
other natural elements.
Third parties can help you conduct the assessment.
The evaluation should be thorough to ensure that every
element of the property is factored into the assessment.
For example, if you own an office building, the assessed
value of the building should consider your tenant mix and
rent schedule.
Enlist Help
Should you determine you want to appeal the
assessment, get an advisor with experience in assessing
the property taxes involved. You are essentially building
a case to prove your current assessment does not
adequately reflect the value of your property. A third party
can assist in the documentation process.
Look for Other Forms of Relief
States offer different types of property tax exemptions,
discounts, credits and rebates.[1]
When determining if
your property tax liability could be reduced, you want to
ensure you are taking advantage of all the benefits for
which you are eligible. A tax professional experienced in
working with the nuances of state and local property tax
provisions can assist you in meeting your compliance
requirements and coordinating the applicable benefits.
Repeat as Necessary
Businesses in particular should consider having their
property evaluated each year, regardless of whether a
reassessment is needed. A professional eye can help
identify potential sources of lower values and elements
that could qualify for property tax relief.
(Continued from page 1)
[1] http://www.kiplinger.com/article/taxes/T055-C000-S002-how-to-
reduce-your-property-taxes.html
For more information about
property taxes, contact the author,
Jay Mason, or your local CBIZ MHM
tax professional.
CongressPermanentlyExtends
SeveralTaxProvisionsImportant
toRealEstateIndustry
T
he “Protecting Americans from Tax Hikes Act of
2015” (“PATHA”), signed by President Obama on
December 18, 2015, for the first time permanently
enacting a number of the tax breaks generally dubbed
the “Extenders” because of the need to extend them year
after year. The House of Representatives passed the bill
on December 17 and the Senate followed suit the next
day. This represents the opportunity for an extended
period of certainty for taxpayers who rely on these tax
incentives but have to wait until December of each year to
make business and personal decisions affected by them.
Business Provisions - Permanently Extended
Several provisions important to the commercial real
estate industry which had expired at the end of 2014
not only were reinstated but were extended permanently.
Further, some provisions have been enhanced
significantly from their previous incarnations.
Increased Section 179 Expensing Election – The Section
179 immediate expensing election had plummeted
from $500,000 in 2014 to $25,000 in 2015. With
PATHA, businesses with adequate taxable income can
(Continued on page 3)

3. PAGE 31-800-ASK-CBIZ • www.cbiz.com/CommercialRealEstate CBIZ BizTipsVideos@cbiz
immediately deduct up to $500,000 of qualified tangible
property (including off-the-shelf computer software) in
2015 and all subsequent tax years. The Section 179
deduction begins to phase out when total qualified
purchases for the year exceed $2 million. Several
enhancements to the Section 179 deduction take effect
in 2016:
n The $250,000 cap on qualified real property
(consisting of qualified leasehold improvements,
qualified restaurant property and qualified retail
improvement property) no longer applies;
n Air conditioning and heating units will be eligible
property; and
n The $500,000 and $2 million limits both are indexed
for inflation.
15-year Straight Line Cost Recovery – Traditionally
depreciated over 39 years, qualified leasehold
improvements, qualified restaurant property and qualified
retail improvement now permanently can be depreciated
over 15 years on a straight-line basis. Improvements must
be made to the interior of non-residential real property
more than three years after the building was placed in
service. Qualifying restaurant and retail improvements
can include improvements to owner-occupied or leased
space while qualifying leasehold improvements may only
include leased space (related party leases do not qualify).
PATHA also permanently reduced the recognition period
for built-in gains of S corporations from 10 to five years.
Therefore, anyone holding real estate in a C corporation
can consider converting to an S corporation if you plan to
hold the appreciated real estate for more than five years.
Business Provisions – Extended Through 2019
While not extended permanently, some business provisions
received a healthy five-year extension through 2019:
Bonus Depreciation – Taxpayers can once again elect
to take additional first-year (“bonus”) depreciation on
qualifying asset purchases through December 31, 2019.
The bonus depreciation percentage, however, decreases
in the later years as follows:
PLACED IN
SERVICE DURING
BONUS DEPRECIATION
PERCENTAGE
2015 50%
2016 50%
2017 50%
2018 40%
2019 30%
(Continued from page 2)
As in previous iterations of the provision, qualifying
assets generally include new tangible personal property,
off-the-shelf computer software and qualified leasehold
improvements. Qualified restaurant or retail property do
not qualify for bonus depreciation in 2015 unless the
property also meets the definition of qualified leasehold
improvements. Beginning with property placed in service
in 2016, however, bonus depreciation may be claimed
on an addition or improvement to the interior of any
nonresidential real property. PATHA also reinstates the
corresponding election to accelerate AMT credits in lieu
of claiming bonus depreciation, increasing the amount of
AMT credits that can be claimed beginning in 2016.
Business Provisions – Extended Through 2016
Not to be left out, some of the narrower or less popular
business provisions were extended through 2016.
Though the long-term prospects for these provisions are
unclear, the multi-year extension at least gives taxpayers
who can benefit from the provisions the opportunity to do
so. Provisions extended through 2016 of most interest to
the commercial real estate industry include the energy
efficient commercial buildings deduction. Several other
energy incentives were also extended.
This article was authored by Bill Smith and Phil Zaman
of the CBIZ National Tax Office. For more information
about income taxes, please contact CBIZ MHM tax
professional.
PHIL ZAMAN
National Tax Office
BILL SMITH
National Tax Office

4. PAGE 41-800-ASK-CBIZ • www.cbiz.com/CommercialRealEstate CBIZ BizTipsVideos@cbiz
This Guest Article is provided by Selequity.com,
a crowdfunding and investment service.
O
wners, developers and investors in cash-flow
investments like commercial real estate (CRE) are
frequently faced with the disposition of a prime
piece of real estate for a variety of reasons. Many times
the reason cited is liquidity.
CRE investments are regularly held in
partnerships or LLCs for long periods of
time to allow for appreciation of the value
of the property and the realization of
the significant revenue from annual
cash returns. The illiquid nature of CRE
investments is occasionally seen as a
barrier for investors; however, investors
are often rewarded with appreciating
values and annual cash returns
sometimes exceeding stock market returns
by as much as 100 percent. During the period
of Q4 2000 to Q3 2015, CRE properties gained
over 108 percent in value in the US, and the Dow and SP
500 gained 50 to 60 percent. Also of note is the average
Dow stock produces a 2.5 to3.0 percent dividend, and CRE
properties typically generate a 6 to8 percent annual return.
Recent legislative changes (the Jumpstart Our Business
Start-ups Act of 2012, or JOBS Act) opened equity
investing to many more investors. This means CRE
owners and developers (sponsors) are no longer
restricted to raising money only from people with whom
they have “a substantial business relationship.” They
can now “generally solicit” accredited investors: those
persons with assets exceeding $1,000,000 beyond
the value of their primary residence or having annual
incomes of $200,000 for an individual or $300,000 for a
couple. All of this raises a question –
Why sell your prized real estate? Why not recapitalize
with the Crowd?
Sponsors typically have a plan regarding their holding
period for a CRE investment, quite frequently in the
five to eight year range. More often than not sponsors
collect fees to manage and operate the property, so, if
the property is located at Main First and is providing a
high performance return for the investors and fees to the
sponsor, why sell?
Online investing by the “crowd” provides the ownership
with the ultimate flexibility of funding without losing
control of this high performing asset. The current
partnership can now be recapitalized with new
investments coming from an online crowdfunding project.
This is a new way to provide liquidity to your initial
investors who may need to pull their money off the table
for a multitude of reasons including cash flow issues,
estate planning, diversification, etc. The owners also may
be able to return the initial capital and take some of their
profit early, if the asset has appreciated enough.
An online capital raise from accredited investors, using a
platform like Selequity, helps current investors who desire
liquidity and locates new investors who want the benefit of
CRE ownership as a part of their portfolio.
Recapitalizing an existing asset provides the
sponsor with the ability to disclose actual
performance returns, not just pro forma
estimates. More often than not a CRE
property’s past performance may be
seen as attractive to a new group of
investors.
Investors enjoying some liquidity from
a recapitalization can easily absorb
the costs associated with getting their
investment and profits returned. Liquidity
premiums in recapitalizations could range
from 10 to 20 percent, likely much better than a
direct buyout from the sponsor, and have no effect on
the investors staying in the deal. The exiting investors
also may be more favorably inclined to making future
investments with that sponsor.
The passing of the JOBS Act has created a valuable tool
for sponsors to access new capital from investors who
previously did not have an opportunity to make a CRE
investment. Using the power and efficiency of the internet
to broadly solicit new accredited investors will provide
significant growth in the CRE investment industry with
eight million accredited investors in the US, controlling
$11 trillion in assets.
Online CRE investing models are just getting started, but
using online stock trading as a guide, this model will also
change an industry. Massolutions, an industry research
group, is estimating online real estate investing will reach
over $130 billion in the U.S. alone by the year 2020.
Crowdfunding is the key to ultimate flexibility–for the
sponsors and investors alike.
Crowdfunding-
TheUltimateFlexibility
For more information about crowdfunding and how it
works, you are invited to visit Selequity.com.

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C
yber intrusions are no longer one-off events. Cyber
issues are a fact of doing business. Cyber risk
should be top of mind for business owners and
executives across all business sectors and industries –
retailers, service providers, financial institutions, property
managers – there is no safe haven.
According to Ryan Vela, Dallas-based regional director
of North America reactive and proactive cybersecurity
services at Fidelis Cybersecurity, “70% of security
professionals think they have done enough with respect
to security, but 40% still expect to be breached.”1
While the threat is acknowledged, directors need to
understand and approach cybersecurity as an enterprise-
wide risk management issue, not just an IT issue,
according to the National Association of Corporate
Directors.
How vulnerable are you? Well, let’s begin with email. Vela
recalled an incident where a hacker who was already
in a large oil company’s system noticed that one work
group ordered takeout from a Chinese restaurant every
Friday. The hacker created a PDF labeled as an updated
menu. When
workers clicked
on the menu, the
hacker was able
to download code
to user PCs, giving
them access to
business data.
But email is
hardly the only way in. Printers, thermostats and video
conference equipment – even VPN connections – can
provide entrée to your system.
In his exclusive November 2015 interview with GlobeSt.
com, Kelly discussed specifically how the commercial
real estate community is at risk. He noted that while
the growing trend of conducting operations through the
internet offers clear cost and control advantages, there
are also clear vulnerabilities. Important services like
HVAC can be tampered with or shut down; contractors
and vendors holding key data may be vulnerable.
While suggesting that employee training and clear
security policies can close the door to nearly 80% of
intrusions caused by employee carelessness, Kelly
advocates establishing “multi-disciplined teams” with
C-suite leadership that can respond to both online and
onsite security events.
From “Best” Practice to “Essential” Practice
When cybersecurity is not part of the business process,
it leaves a company vulnerable to a range of security
issues. Prevention and protection measures are
critical. These should include both risk analysis through
assessment and risk mitigation through the growing
pool of cyber-focused insurance products and internal
operational safeguards. If this topic is within your
sphere of responsibility, you may want to check out our
Cybersecurity Quick Assessment and will find articles of
interest on our blog (search “cyber”).
For additional information, questions or to discuss
cyber risk, contact the authors, Chris Roach,
National IT Practice Leader for CBIZ Risk Advisory
Services, or Damian Caracciolo, Vice President,
CBIZ Executive Risk.
CyberRisk-Now,ItIStheDailyNews
“Cyber risk is growing
exponentially.”
— RAY KELLY, former NYPD Commissioner and former leader
of Risk Management Services at Cushman Wakefield
“The United States faces
unprecedented cyber
security threats.”
— TOM RIDGE, former Homeland Security Secretary
1
Cyber hackers often target equipment, systems that are never checked,
Business Insurance, 10/27/15.