When it comes to running a construction or real estate business, there is one thing everyone can agree on: staying ahead of the game isn’t easy. Between managing financial uncertainties, planning for the future, and navigating market trends, there is a lot to think about. As we look toward 2025, here are four key areas to focus on to keep your business thriving.
Financial Strategies That Make a Difference
Money matters, especially in construction and real estate, where every decision can impact your bottom line. From fluctuating material costs to labor shortages and regulatory changes, it’s no secret that challenges abound. That’s why a solid financial plan is pertinent.
One of the most important things you can do is keep a close eye on cash flow. Whether it’s late tenant payments or unexpected cost increases, cash flow issues can sneak up fast. Staying on top of it helps you spot potential problems early, make better investment decisions, and even improve your chances of securing financing. Lenders love to see businesses with strong cash flow management—it’s a sign you’ve got things under control.
Planning for the Next Generation
If you’re a business owner, you’ve probably thought about what happens when it’s time to pass the torch. Succession planning is a must, especially for family-owned businesses. And here’s why 2025 is a critical year: under current law, the lifetime gift/estate tax exemption is set to be reduced in 2026, which could have major implications for your financial plans.
Succession planning can be difficult, but it is essential for securing the future of the business and the personal wealth of the owners. Estate planning strategies not only protect against unexpected leadership changes and minimize tax liabilities but also provide a clear roadmap for passing on the business to the next generation or preparing it for sale. Ultimately, careful planning allows for a smoother transition, a reduction in financial burdens, and the preservation of the business’s value and legacy.
Keeping an Eye on the Economy
The construction and real estate sectors are heavily influenced by the economy. Interest rates, inflation, and employment rates all play a role in shaping the industry. Staying informed is key to making smart decisions.
It’s also crucial to keep up with regulatory changes. Whether it’s new building codes or environmental regulations, compliance isn’t optional. But being proactive here can give you a competitive edge, positioning your business as a leader in the industry and a magnet for clients who value sustainability and innovation.
Smart Tax Strategies
Leveraging tax incentives, credits, and staying updated with the latest tax regulations can provide significant financial benefits. In the construction and real estate sectors, there are several tax incentives available.
One of the most effective tax optimization techniques available to real estate owners and investors is a cost segregation study. This study allows property owners to accelerate depreciation deductions by identifying and classifying specific components of a property that can be depreciated over shorter periods, typically 5, 7, or 15 years, rather than the standard 27.5 or 39 years for residential or commercial buildings. By breaking down a property’s costs, a cost segregation study enables property owners to reduce their current tax liability and improve cash flow.
Beyond that, there are plenty of other opportunities to save, from credits for low-income housing and renewable energy to potential incentives from new legislation, like the proposed Revitalizing Downtowns and Main Streets Act, which is aimed at incentivizing conversion of commercial space to residential. Keeping up with these changes can help you stay ahead of the curve—and the competition.
Ready to Take the Next Step?
2025 is shaping up to be a big year for construction and real estate, and preparation is everything. If you’re looking for more insights, join us at our upcoming NYS Construction & Real Estate Industry Conference! We’ll dive deeper into these topics, share actionable strategies, and explore other trends shaping the future of the industry. Don’t miss out—register today and make sure your business is set for success in 2025 and beyond.
If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
