Economic conditions and policy developments continue to shape how construction and real estate businesses plan for the future. For CFOs, controllers, CPAs, and industry executives, these developments can affect financial reporting and client advisory decisions.
As 2027 approaches, infrastructure investment and tax policy deserve attention, along with financing conditions and regulatory requirements. These issues will be among the topics covered at the AICPA® Construction & Real Estate Conference, Dec. 7–9, in Nashville and live online.
How infrastructure policy affects construction projects
For construction businesses, federal funding decisions can influence which projects move forward and when work begins. Contractors pursuing publicly funded projects must consider how shifting infrastructure priorities could affect their project pipelines and bidding strategies.
With a new Congress, infrastructure priorities may change, particularly around permitting, funding, and regulations. These changes could influence which construction projects move forward and when, from data centers to highway infrastructure.
For finance professionals, the implications extend beyond securing new work. Project delays and unexpected compliance costs can affect estimated costs to complete and projected contract margins.
What finance teams need to consider as projects change
Under FASB Revenue From Contracts With Customers, contractors that recognize revenue over time using a cost-based measure of progress may need to revise revenue calculations when estimated project costs change. Those revisions can affect reported revenue and profitability before a project reaches completion.
Consider a contractor working on a publicly funded transportation project. If funding delays extend the construction schedule, the finance team may need to reassess labor costs and projected margins. The contractor must determine whether available working capital can support the extended timeline.
Work-in-progress schedules can help identify differences between expected and actual performance. Reviewing these schedules alongside updated cost estimates may reveal margin deterioration before it becomes a larger financial problem.
For CPAs advising construction clients, understanding the connection between funding decisions and contract accounting can help identify where additional financial review is warranted.
Conference attendees can explore these considerations further during Deniz Mustafa’s session, “Construction Legislative Update,” on Tuesday, Dec. 8, from 4:10–5:25pm CT.
Why real estate tax policy matters for investment decisions
Real estate investment decisions often begin with a question: Does the expected return justify the cost and risk?
Tax treatment can materially affect that calculation. Depreciation influences the timing of deductions, while capital gains treatment can affect how much capital an investor retains after selling a property.
Federal legislation enacted in 2025 restored 100% bonus depreciation for certain qualifying property acquired and placed in service after Jan. 19, 2025. The provision makes asset classification and acquisition timing important considerations for investors evaluating eligible improvements and other qualifying assets.
However, bonus depreciation generally does not apply to an entire commercial building. Tax professionals must determine which assets qualify and assess how accelerated deductions affect projected after-tax returns.
Property dispositions introduce different tax considerations. Investors evaluating a sale may need to account for depreciation-related tax consequences and the requirements for deferring gain through a Sec. 1031 like-kind exchange.
Sec. 1031 generally applies to qualifying exchanges of real property held for investment or business use. For deferred exchanges, replacement property must generally be identified within 45 days and received within 180 days or the applicable tax return due date, if earlier. Failure to meet these deadlines and other applicable requirements could prevent an investor from qualifying for the intended deferral.
What opportunity zone changes mean for 2027
Legislative changes to the opportunity zone program may also affect investment considerations beginning in 2027.
Federal legislation enacted in 2025 made the qualified opportunity zone incentive permanent and established a new designation cycle. The first new designations take effect Jan. 1, 2027, with subsequent designation cycles occurring every 10 years.
The transition matters because existing opportunity zone investments may be governed by different rules than investments made under the new framework. Tax professionals should review the applicable provisions and current IRS guidance before evaluating potential tax benefits.
These developments illustrate why tax planning should begin before an acquisition or disposition. Understanding current requirements, while monitoring additional guidance, can help finance teams evaluate available options.
Attendees of Ryan McCormick's session, "Real Estate Tax Policy and the Legislative Outlook in the New Congress," will leave the discussion with a better appreciation of the political dynamics driving the debate over real estate tax policy and better able to assess, analyze, and handicap potential tax changes in the year ahead. Catch the session on Tuesday, Dec. 8, from 4:10–5:25pm CT.
When financing pressures change the outlook
Tax policy is only part of the financial picture. Commercial real estate businesses must consider borrowing costs and insurance expenses when evaluating investments.
Property owners approaching loan maturities may face refinancing conditions that differ from those in place when their original loans were issued. Changes in property valuations or operating income can affect borrowing capacity.
Debt service coverage ratios provide one measure of whether a property's income can support its debt obligations. Lenders may also evaluate loan-to-value ratios when determining financing terms.
For finance teams, monitoring these measures can help identify refinancing risks before a loan reaches maturity. A property with declining net operating income may face additional constraints, particularly if its valuation has fallen.
Insurance costs can further affect projected returns. Higher premiums may reduce available cash flow and influence whether a planned acquisition or development remains financially feasible.
These pressures can extend to construction businesses. When developers postpone projects because of financing constraints, contractors may need to adjust revenue forecasts and staffing plans.
Understanding these relationships can help CPAs evaluate how conditions in one industry affect financial expectations in the other.
Preparing for decisions in an uncertain environment
Although businesses cannot predict every legislative outcome, they can assess how changes in funding, tax policy, regulations, and financing conditions might affect their plans.
For construction companies, that may involve testing how a project delay affects estimated costs to complete and working capital. Real estate businesses may need to compare refinancing scenarios using different interest rates or property valuations.
Scenario analysis becomes more useful when finance teams identify the assumptions that have the greatest effect on results. A contractor might evaluate how rising labor costs affect contract margins under ASC 606. A real estate investor could compare the after-tax proceeds from a property sale with the potential benefits and requirements of a like-kind exchange.
These evaluations can identify where financial exposure warrants closer attention. They can help professionals distinguish decisions that depend on current requirements from those that may be affected by future guidance.
As 2027 approaches, CPAs and finance leaders have an opportunity to connect policy developments with the accounting and financial considerations affecting their organizations and clients.
The AICPA Construction & Real Estate Conference offers an opportunity to examine current issues affecting both industries through expert-led sessions and discussions with other professionals.
The three-day conference begins Dec. 7, 2026, at the JW Marriott Nashville, and is also available live online. Register today for the AICPA Construction & Real Estate Conference and gain insights you can put into practice in the year ahead.