Tips to reduce income taxes for real estate owners

1. Tips to reduce Income taxes for real estate owners www.expertcostseg.com

2. Income taxes are a regrettable fact of life www.expertcostseg.com Equally regrettable is that few real estate investors utilize the multitude of generous income tax benefits available to them These benefits include cost segregation as well Income taxes can be sharply reduced with modest planning

3. Real estate investors are able to depreciate a substantial portion of the cost basis of properties they purchase to reduce their income taxes. Reduce federal Depreciation is important because it: income taxes by increasing depreciation 1) is a non-cash expense 2) converts ordinary income into capital gains income and 3) defers the payment of income taxes Depreciation defers payment of income taxes from the year in which it is earned until the year when the property is sold. Investors may further defer the recognition of gain/income by utilizing a 1031 exchange.

4. The role of cost segregation Cost segregation is a specialized service used by many real estate investors to enhance the benefits of depreciation It allows owners to increase the amount of depreciation by 50% to 100% during the first five to seven years of ownership Cost segregation increases the level of depreciation by identifying up to 130 portions of the building which qualify for short-life depreciation Short-life items can be depreciated over 5, 7 or 15 years Buildings are depreciated over 27.5 years (rental residential real estate) or 39 years (commercial property) Cost segregation is financially feasible for real estate with a cost basis of at least $500,000 (for the improvements)

5. Casualty loss & depreciation A casualty loss for real estate investment property could include fire, flood, hurricane, tornado, or mudslide. Real estate owners incur both financial and emotional distress following this type of casualty. There’s also a significant amount of work involved to coordinate with the insurance adjuster, tenants, contractors, vendors and lender. Even if the owner has complete insurance for building repairs and business interruption, a casualty loss deduction can legitimately be taken. Casualty losses provide the opportunity to depreciate a large portion of the cost basis of real estate. The basis for calculating a casualty loss is the value of the property immediately before the casualty versus the value of the property immediately after the casualty plus insurance proceeds. Real estate investors use depreciation to reduce federal income taxes

6. They can further reduce federal income taxes by using cost segregation to increase the level of depreciation by 50 to 100% during the early years of ownership. Those suffering a casualty loss can often take a large deduction as a legitimate casualty loss Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market.

7. Property Types Self-storage Industry Types Amusement park Furniture manufacturing Cost segregation Truck terminal Beverage and tobacco product Student housing manufacturing for virtually all property types & industries Truck stop Machinery manufacturing Racket club Food manufacturing Multifamily Fabricated metal products Regional mall Transportation equipment Discount store manufacturing Single-tenant retail Leather product manufacturing Day care facilities Arts, Entertainment, and Recreation Paper manufacturing

8. To know more visit www.expertcostseg.com