DEP Tangible Property Regulations

The Tangible Property Regulations

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What you need to know to be compliant

The Tangible Property Regulations (TPRs) provide guidelines for building owners to determine to expense or capitalize costs spent on property from 2014 forward. If a building owner and their tax professional have not discussed and planned for the TPRs, both parties will overlook the opportunities. Since 2013, the CPA community has been seeking resource partners who are experts in segregating components of commercial buildings for their clients to take advantage of this underutilized yet mandatory law. These regulations are not just an advantageous opportunity for building owners; this is the law. Under code section 263(a)(1-3), the Tangible Property Regulations are the most significant tax change for real estate owners and investors since the Tax Reform Act of 1986. The repair regulations codify and define which expenditures on assets currently in service can be written down as an expense and which ones need to be capitalized. The regulations also clarify confusion and are designed to reduce conflicts from previous court cases and regulations. The TPRs generally define which expenditures improve an asset and keep it in its current operating condition.

The Tangible Property Regulations
are Not Optional.

The final regulations apply to anyone who pays or incurs to acquire, produce, or improve tangible real or personal property. They are law, and all taxpayers with tangible property have been required to follow the regulations for tax years beginning on 1/1/2014. Compliance can be advantageous as the regulations can be very taxpayer-friendly.

How TPTM will Work for You​

The Tangible Property Regulations are extremely complex and expert guidance is required. When the TPRs are followed, there can be a reduction in income, but the penalties can be severe when ignored. TPTM will find past expenditures that can now be capitalized and will work with your CPA to correctly implement your updated depreciation.  In addition, TPMT will assist taxpayers in deciding how and when to renovate or repair buildings so the expenditures can be expensed. This advice and guidance will create a reduction in the current year’s tax liability and reduce long-term capital gains upon the sale of the property.

Download Our TPR Whitepaper

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