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Tax, Insurance and Cash Flow: Finance Lessons for Multi-Property Real Estate Portfolios
The Real Estate Spotlight was one of three industry spotlights at The Future Is Fractional 2026, hosted by Scrubbed on September 24, 2026. Scrubbed partner Ejie De Jesus moderated a conversation with Geraldine Serrano, Director at Specialty Tax Group; Alex Gilmete, commercial property and casualty advisor at USI Insurance Services; and Blake Peters, founder and principal of Peters Specialty Tax Services. They covered cost segregation and bonus depreciation, R&D tax credits for real estate, insurance availability and replacement costs, and shared and layered coverage for portfolios. The short version: bring tax and insurance specialists in before decisions are made, check that your coverage reflects today’s replacement costs, and look beyond a general CPA for specialized incentives. Real estate finance is rarely one entity with one set of books. It’s multiple properties, multiple entities and often multiple jurisdictions, in a tax and risk landscape that keeps shifting. At The Future Is Fractional 2026, a virtual conference hosted by finance and accounting advisory firm Scrubbed on September 24, 2026, Session 4 split into three industry breakouts running at the same time: real estate, nonprofit and technology. In the real estate track, Scrubbed partner Ejie De Jesus brought together three specialists in cost segregation, tax incentives and commercial insurance to talk about the strategies owners most often miss. Key Takeaways: Timing is the biggest gap. Tax incentives and cost segregation are often considered after key decisions are made, when the options have already narrowed. Cost segregation accelerates depreciation. Splitting a building into shorter-lived components lets owners take larger deductions sooner, and 100% bonus depreciation, restored by 2025 tax law, can pull those deductions into year one. R&D credits reach further than most owners think. Engineering, structural and energy design work on a property may qualify. Insurance has changed fast. Some properties can’t get standard A-rated coverage, and replacement costs may have outrun policy limits. Portfolios can share coverage. A shared primary layer with excess layers on top can cost less than insuring every property to full value. Bring in specialists early, keep the decisions. Specialist advisors fill in the picture; the owner makes the call. Meet the Panel Ejie De Jesus (moderator): Partner, Scrubbed. Geraldine Serrano: Director, Specialty Tax Group, known as the “Cost Seg Queen,” specializing in cost segregation and tax strategy for real estate investors. Alex Gilmete : Commercial Property and Casualty Advisor, USI Insurance Services, helping businesses manage and transfer risk. Blake Peters : Founder and Principal, Peters Specialty Tax Services, specializing in R&D tax credits and other incentive programs. Timing and Visibility Gaps in Portfolio Finance Awareness comes too late. Blake Peters said the largest gap he sees is awareness. Incentives such as investment tax credits, R&D credits and energy efficiency deductions are buried in the tax code, and when owners do know about them, they’re often “looked at a little too late in the process.” Evaluating them at the start of a project can improve returns, help finance it and give investors clearer visibility. Risk has shifted fast. Alex Gilmete said insurance has changed dramatically in just a few years. Supply chain issues, tariffs and, in California, wildfire risk have reshaped how carriers, lenders and investors view a property, and how much liability an owner carries. Property risk and insurance volatility Standard carriers, non-admitted carriers and the FAIR Plan Some properties can no longer be insured by standard A-rated carriers, Gilmete said. Location, fire exposure and crime all affect what carriers will take on. Coverage Route What The Panel Described Standard A-rated carriers Increasingly selective; may decline older or un-upgraded buildings Non-admitted carriers An option when standard carriers decline, at higher cost California FAIR Plan A fallback in California when other options aren’t available That’s why Gilmete talks with investors while they’re still comparing properties. What a carrier thinks of a location affects rates and coinsurance terms (the clause that penalizes owners who insure for less than full value). He said many investors are looking at Nevada as an alternative to California, while Texas carries its own fire and flood challenges. Are you really fully insured? Gilmete warned that long-time investors may not realize how tariffs and supply chain costs have raised replacement values. A building insured for $10 million might now cost $14 million to $15 million to rebuild after a total loss, leaving the owner to cover the gap. Shared and layered coverage for portfolios Rising premiums reduce net operating income, and lower NOI lowers property value. For portfolios, Gilmete described a shared and layered approach. Take 10 properties worth $10 million each. The owner may not need $100 million of primary coverage, since a total loss on every property in one policy period is unlikely unless they share a fire or flood zone. Instead, a shared primary layer, perhaps $30 million, covers all 10, with excess layers stacked on top from different carriers. Each higher layer is less likely to be used, so it costs less per dollar of coverage. Insurance review checklist, drawn from the panel Does the policy limit reflect today’s replacement cost, not the original value? How old are the roof, HVAC, plumbing and electrical systems, and what fire suppression and egress are in place? Is everything disclosed to the carrier accurate? Carriers may inspect, and can cancel if it isn’t. How do the location’s fire, flood and crime exposure affect which carriers will quote? For a portfolio, would a shared and layered structure fit your risk tolerance? Cost Segregation: Accelerating Depreciation for Cash Flow What is cost segregation? Cost segregation is a tax strategy that separates a building’s components into shorter depreciation periods. Instead of depreciating the whole property over 27.5 years (residential rental) or 39 years (commercial), owners can deduct shorter-lived components faster, lowering current tax liability and increasing cash flow. The Lego analogy Serrano’s explanation: picture a house built of Legos. The IRS treats a residential rental as wearing out over 27.5 years. But not every piece lasts that long. Carpet, floor coverings, cabinets and countertops are five-year pieces. Driveways and landscaping are 15-year pieces. A cost segregation study takes the house apart and sorts the shorter-lived pieces into their own buckets. Bonus depreciation under the One Big Beautiful Bill Act The One Big Beautiful Bill Act, signed in July 2025, restored 100% bonus depreciation and made it permanent for qualifying property acquired after January 19, 2025. Combined with cost segregation, that lets owners deduct the full cost of those shorter-lived components in the first year. Serrano told the story of a client she called “Mr. I Hate the IRS,” who was about to mail a $100,000 check to the IRS. Cost segregation studies on his 12 Denver-area rentals eliminated the liability. His CPA hadn’t recommended it because she believed it applied only to commercial property. Results depend on the owner's situation. Rules on passive rental losses and depreciation recapture when a property is sold can change the math. She also pointed to manufacturers. A newer provision allows qualifying manufacturing buildings to be fully expensed rather than depreciated, so those owners may not need a cost segregation study at all. Before or after construction? Before, Serrano said. “The sooner we talk about the project, the better.” She cited an owner who built an Oakland office from shipping containers and welded them together because it was cheaper. Bolting them, so they could be taken apart, might have qualified far more of the building as five-year property. That may not have changed his choice, but he would have made it knowing the tax impact. He also demolished an existing structure without his CPA setting up a general asset account, and missed a tax benefit as a result. For cost segregation, she noted, what matters is when a building was bought and placed in service, not its age. Insurers look at age. Planning has to account for both. R&D Tax Credits for Real Estate and Construction Peters called the R&D credit “one of the worst named credits out there.” For tax purposes, it can cover work involving analysis, alternatives and design, not just scientists and software. In real estate, that can include: Engineers evaluating structural methods depending on contract terms HVAC and energy design to meet efficiency or LEED requirements Custom engineering to improve a building’s performance Manufacturers building capital-intensive facilities Investment in AI, built in-house or subcontracted, across industries His advice: don’t ask “do we do R&D?” Ask where the money and effort are going. What changed recently. From 2022 through 2024, research expenses had to be spread over five years or more instead of deducted right away, research expenses had to be amortized rather than deducted right away, which made the credit less attractive. Peters said the One Big Beautiful Bill Act fixed that going forward and, for some businesses, retroactively. Companies that stopped claiming the credit should reassess. Cost segregation vs. the R&D tax credit. Header Header R&D Tax Credit What it does Accelerates deductions, which lower taxable income A credit that reduces the tax owed dollar for dollar What can qualify, per the panel Shorter-lived components: flooring, cabinets, countertops, driveways, landscaping Structural engineering, HVAC and energy design, custom building systems, capital-intensive facilities When to look Before construction or acquisition decisions At the front end of a project Overlap - Custom HVAC and energy work often touch both, so owners can address them together Capital Improvements: Tax benefit and Insurability Do roof or HVAC upgrades lower insurance costs? Not directly, Gilmete said. But major carriers may refuse to quote older buildings that haven’t been upgraded. He described a Santa Clara property where the roof had to be replaced before A-rated carriers would consider it. On the tax side, Peters said custom engineering for HVAC or energy performance can qualify for the R&D credit. Keep the Decisions, Bring in the Experts The panel’s closing advice was about what to keep in-house. General CPAs may be excellent but lack this level of specialization. Serrano offers clients a second review by another CPA when their current CPA is unfamiliar with cost segregation. Bringing in specialists early to review tax incentives, cost segregation, contracts, insurance policies and risk tolerance lets the owner decide with a full picture. As Gilmete put it, the experts “fill out your dashboard, and then the owner gets to make decisions based on that dashboard.” This session is part of TFIF 2026. To see how planning connects to talent, AI and team design, read, read Own the Core, Access the Rest: What The Future is Fractional (TFIF) 2026 Revealed About How Finance Teams Are Being Rebuilt what finance leaders are rethinking about talent, AI and team structure.
