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requirements and they may be more interested in not owning real property and only lease their facilities. The tax benefits of depreciation may not have as much interest for large investment groups and in such cases, selling the real property and leasing from a REIT (Real Estate Investment Trust) or other Real Estate Investment Group may make more sense. Although these arrangements could provide more liquidity, they typically require a longer-term lease, and if selling off, you are typically not getting full fair market value and the lease terms back are sometimes higher than a local fair market value with much less flexibility. Closely held dealership groups typically would borrow against the equity of their real estate holdings if the need for liquidity should arise.

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Another item to consider is the long-term value of improvementsmade to your facility. Most of the Manufacturer Compliance Requirements have demanded investments of over $1.5 Million or more. Fortunately, most of the states have clamped down on the number of times improvements and compliance requirements can be forced on dealers so, in most cases, an average of 10 years is the time period between investing in required facility improvements. If the manufacturer can secure site control over the property, a limitation on future use or the sale of the property can be severely limited. Careful structuring of a site control

agreement should be considered if it becomes necessary. The only good thing about granting site control is that if the manufacturer provides facility assistance payments, these may be qualified for capital gains tax treatment rather than ordinary income rates. To best determine the benefits of owning and operating real property on your own, a projected after tax cash flow analysis should be prepared to determine the cash flow return on the investment and if the projected appreciation over the time you expect to hold the property meets your overall investment objective. If you are considering purchasing real property for your dealership operations, many decisions must be addressed from multiple perspectives. As previously noted, deciding to have ownership of the real estate within the operational business, or in a separate legal entity, the transitions into investment and estate planning considerations, along with any legal ramifications. Please contact your trusted legal and accounting advisers to discuss further in determining if real property ownership is for you.

Mr. Rosenfield is the managing partner of Rosenfield and Company PLLC, a CPA firm specializing in and serving hundreds of dealerships throughout the country. The firm has offices in Manhattan, New Jersey and Florida.

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