Property Taxes Saving Techniques

The government runs on money but where from this money comes? They come from the people of the country. We, citizens of the USA, pay to the government for one reason or the other. The USA uses several types of taxes to get the money to run its day-to-day governance.

These include sales tax, property tax, estate tax, income tax, etc. So, tax is basically a compulsory payment that we make to our government. There are several other types of taxes too apart from those mentioned before. These include the following:

1) Corporate tax
2) Investment tax
3) Expatriate tax
4) International company tax.

The tax code is also known as the Internal Revenue Code of 1986. The recent recession has resulted in several measures on the part of the government to recover the economy. World Trade Organization, a subsidiary of United Nations, has warned the US government about budget deficits. The deficits will be a direct result of the temporary tax cuts carried out to boost the economy.

There are several different forms that need to be filled up in relation to submitting information related to tax. These include filing Form-1040 with the Internal Revenue System. Taxation can be confusing, and it is better to ask for help if you do not understand a certain detail. Whether you did not file returns for a considerable time, or you are in a hassle regarding taxation in Maryland, you require competent legal assistance.

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US tax structure is known to be progressive in nature. The concept of progressive taxation should be clarified in this context. A progressive tax is a type of taxation structure where big income earners have to pay more tax and small earners pay small tax. A person can get his tax calculated by two methods:

Regular tax calculation involves deducting any applicable deductions from the gross income. There you will apply the percentage tax as per the tax bracket of the taxpayer.

Alternative Minimum tax is the second method to pay tax to the government. In this method of tax computation, tax is calculated on the gross income. It is not based on any other preference items (like those that can be exempted from tax).

This second method of tax computation has lesser number of deductions and exemptions. In 2000, the Silicon Valley (the IT hub in the USA) was caught unprepared under the Alternative Minimum method of tax calculation. This method of tax computation has tried to plug loopholes to avoid tax.

In case of filing tax or any dispute arising out of tax, a Maryland resident should contact a MD Tax Lawyer. This should be done at the earliest to avoid any mistake while filing returns or avoid legal hassles if there is any such mistake on your part.

For more information, Maryland Lawyer directory has gathered the list of all the renowned lawyers and attorneys. Over the time it has become a vast resource of Maryland based lawyers or law firms.

Over the years with many home owners wondering why were they getting high tax assessment bills that showed their homes being more on paper than they actually were. July 1, 2011 many prayers were finally answered. Check out www.DamonTheAgent.com for all of your Washington, DC Area Real Estate needs.
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Net Lease Dollar General Investment Property in Petersburg, VA (Sold)                                                                                  Reston, VA, July 13, 2010 – Calkain Companies’, a national real estate investment brokerage firm, has procured the sale of a net lease Dollar General Investment property in Petersburg, VA. The 9,014 SF free-standing retail properties are leased to Dollar General Corporation on a long-term, net lease basis. The investment property was sold to a private, 1031-exchange buyer who was seeking a stable and passive investment. Closing price of the sale was 7,350. 1031 exchange, otherwise known as a tax deferred exchange is a simple strategy and method for selling one property, that’s qualified, and then proceeding with an acquisition of another property (also qualified) within a specific time frame. The logistics and process of selling a property and then buying another property are practically identical to any standardized sale and buying situation, a “1031 exchange” is unique because the entire transaction is treated as an exchange and not just as a simple sale. It is this difference between “exchanging” and not simply buying and selling which, in the end, allows the taxpayer(s) to qualify for a deferred gain treatment for Investments.                            

Andrew Fallon of Calkain Realty Advisors, the private market division of Calkain Companies, led the marketing and sale of the transaction. The property went under contract quickly given the favorable lease terms, stable tenant and strong location. Fallon generated multiple offers for the asset, signaling that investors are becoming more active in the current market. “Single-tenant net lease investments remain in high demand given their long-term, predictable income streams” says Fallon. Fallon added “Many investors appreciate the credit worthiness and brand recognition associated with top retailers, including Dollar General. Favorable lease terms and strong real estate fundamentals provide investors with secure investments.” One of the better choices is to invest in single-tenant, net-leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.

Dollar stores, including Dollar General, have been one of the prime beneficiaries of the economic downturn. While many other retail chains either downsized or closed stores, the dollar store concept underwent unprecedented expansion. Dollar General plans to add 600 stores during 2010. The new stores will continue to be an appealing investment opportunity. Dollar General Corporation is the nation’s largest small-box discount retailer. We make shopping for everyday needs simpler and hassle-free by offering a carefully edited assortment of the most popular brands at low everyday prices in small, convenient locations. Dollar General ranks among the largest retailers of top-quality brands made by America’s most-trusted manufacturers, such as Procter & Gamble, Kimberly Clark, Unilever, Kellogg’s, General Mills and Nabisco.

.8 billion in sales in fiscal 2009
8,800+ stores in 35 states
7,100 square-foot stores
About 12,000 core products from America’s most-trusted manufacturers
9 distribution centers
79,000 employees

Calkain is a full service real estate brokerage firm with a national scope focusing on single and multi tenant retail, industrial and office net leased transactions. Calkain has offices in Reston, VA (Washington, DC), McHenry, MD and Tampa, FL. Additional information about the firm and its listings may be found at www.calkain.com.

Kate Faulkner, MD of the independent property advice site Designs on Property says that the coming year may be a good time to buy a house depending on your ‘risk profile’.

As a first time buyer, if you buy now, it may be that prices in your area will fall (see below) and as long as you have secured a 10-20% discount off the value of the property, this should cushion you from future falls. Remember the discount is off the property’s value, NOT the price the property is marketed at by an agent. To find the true market value, it’s worth either doing your own DIY Valuation, allowing Designs on Property to do it for you or securing a valuation from a local surveyor that knows the area well.

So, if you do buy now, you might be able to secure a great bargain, but you have to cushion yourself in case property prices fall further due to the impact of the spending cuts. And if you are willing to take this risk, it’s worth considering buying now.

The second question you need to ask is ‘is my local area rising or falling in value?”. Currently at a national level, property prices in most areas are 10-20% below their 2007 peak when the average property price was £183,695 (Land Registry data). Prices on average fell to £152, 657 during 2009, then increased back to around £166,000 in 2010 and since then have fallen back to £161,000 in March 2011.

This is just the national picture though and what happens nationally versus what’s happening in your area is probably completely different! The reason being is we are finding some areas, which tend to be the richer areas, high in equity and a good private economy, property prices are showing a recovery, slowly but surely towards 2007 levels. In other areas, property prices are still dropping, especially where home equity is low and the local economy is more reliant on the government and local authority which is cutting expenditure and increasing unemployment.

It’s essential therefore before you decide to take some time to work out if your local property market is rising or falling, read our ‘How to check out the local property market’ article to find out how to do this, for free, yourself.

As a First Time Buyer, apart from understanding your local market and what risk you can afford to take, it is vital to protect yourself by securing a property for 10% less than it is true market value (ie not necessarily what it is marketed at).

It is essential to be able to afford to own the property for at least the next five years (ie to 2016). This should be (but it’s not guaranteed) long enough for the economy, people’s jobs and wealth to recover and property prices nationally to start rising again.

Finally, make sure you protect yourself from being forced to sell the property. For example, if you are sick, made unemployed or you have to move unexpectedly, check whether your property costs can be covered by renting out the property instead.

Alternatively, buy somewhere big enough to rent out a spare room to someone (which might be a friend). You can (depending on the local market) rent a room for up to £4,250 a year (or £350 a month) free of any income tax.

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Tax reductions and tax deductions are both benefits of cost segregation. However, it would be inaccurate to term cost segregation a tax shelter. The IRS has written a manual titled Audit Techniques Guide that delineates methods to establish depreciation schedules and increase tax reductions.

Tax shelter is a moniker that implies a scheme designed to avoid taxes. Some tax shelters were legal and some were clearly illegal. Most of the tax shelters focused exclusively on tax benefits and did not have an economic basis. There is no IRS documentation defining proper methods for implementation of tax shelters.

Tax shelters included activity with the purchase and sale of stock, cattle, real estate (typically high leveraged) and oil and gas. These tax shelters often involved economic activity with a questionable or inaccurate interpretation of the law. In some cases, they involved a questionable economic activity with an accurate interpretation of the law. In other cases, there was no meaningful economic activity associated with the tax shelter.

Cost segregation is simply an IRS-governed method of accurately depreciating real estate and identifying tax reductions. There is no separate economic activity. The tax reductions and tax benefits resulting from cost segregation are substantial. Commercial real estate investors and owners of corporate real estate are amazed at the tax reductions it affords. The IRS’s Audit Technique Guide provides a safe harbor for using cost segregation for real estate to increase tax reductions.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax reductions.

City:

Philadelphia, PA
Hartford, CT
New York, NY
Orlando, FL
Baltimore, MD
Tampa, FL
San Francisco, CA
Miami, FL
Washington, DC
Houston, TX
Albany, NY
Dayton, OH
Charlotte, NC
Des Moines, IA
Harrisburg, PA
Ft. Lauderdale, FL
Augusta, GA
Stockton, CA
Riverside, CA
Minneapolis-St. Paul, MN
Manchester, NH
Sacramento, CA
Charleston, SC
McAllen, TX
Syracuse, NY
St. Louis, MO
Jacksonville, TN
Omaha, NE
Madison, WI
Indianapolis, IN

Cost segregation produces tax deductions for virtually all property types.

Property Type:

Car wash facility
Medical facility
Skating rink
Community shopping center
Funeral home
Truck terminal
Motel
Regional mall
Nursing home
Racket club

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:

Warehousing and storage
Arts, Entertainment, and Recreation
Amusement parks
Day care facilities
Laundry facilities
Electrical component manufacturing
Automotive parts distributors
Beverage and tobacco product manufacturing
Leather product manufacturing
Transportation equipment manufacturing

O’Connor & Associates is a national provider of commercial real estate consulting services including federal tax reduction, cost segregation, due diligence, renovation upgrading cost analyses, tax return review and apartment inspections.

Reston, VA, —Calkain Companies’, a national real estate investment brokerage firm, has procured the sale of two triple net (NNN) lease investment properties in Fulton, MD.  The SunTrust Bank and M&T Bank Ground Leases in Maple Lawn (Fulton), MD were sold to private investors seeking passive and long-term investments.  Closing price of the sale was .2MM.

Rick Fernandez, Assistant Vice President and Jeff Bogart, Tax Strategy Specialist, both of Calkain Realty Advisors, the private market division of Calkain Companies, led the marketing and sale of the transactions.  Fernandez commented, “The strong market demographics, high profile locations and financial strength of the tenants provided sound and stable investment opportunities for the investors.”  The properties commanded a premium price due to the high credit worthiness of the tenants and the above average rent increases during the terms of the lease.  Fernandez and Bogart generated multiple offers for the asset and ultimately completed the sale in an obviously challenging market.  Jonathan Hipp, President & CEO of Calkain Companies continued, “Calkain proved that quality real estate is highly desirable, no matter what market cycle is occurring.”  Bogart commented,” The availability of favorable financing for this transaction and in this market cycle is testament to the strength and stability of the Washington, DC metro market.”

Maple Lawn is an upscale mixed use development outside of the Nation’s Capitol that provides living, working and shopping conveniences.  With over 1,340 homes planned for the development, the long term benefits of the investments are greatly achieved.

The transaction is recorded in the public record.

Calkain Companies is a privately held, national real estate brokerage and advisory firm that specializes in single and multi-tenant retail, industrial, and office net leased transactions. Calkain has offices in Reston, VA (Washington, DC), Tampa, FL, and McHenry, MD.

Tax reductions and tax deductions are a common benefit of cost segregation. When real estate investors and tax practitioners learn about the income tax deductions and tax reductions resulting from cost segregation they are sometimes skeptical; they are concerned it is a tax shelter or tax scheme. This simply is not true. Cost Segregation provides a legitimate tax reduction.

The IRS has published the Audit Techniques Guide (ATG) describing cost segregation and the proper methodology to achieve maximum tax reductions. They report cost segregation is a more accurate method of depreciating real estate (since it establishes a depreciation schedule based on the appropriate life for each component). Depreciation is a key component in tax reductions.

Cost segregation is not difficult conceptually. It involves separating components of the real estate (such as carpet, vinyl tile, paving, sidewalks and landscaping), which have a shorter economic life and depreciate over a shorter period of time. The IRS has generally defined which components qualify for short life depreciation in the ATG. The ATG provides a safe harbor for real estate owners who depreciate real estate consistent with its guidelines.

While cost segregation is simple in concept, its application is somewhat arcane. For example: why is a roof long-life property (39 years for commercial property) while concrete paving is short-life property (15-year property). Most owners would agree the paving would outlive the roof. Another example: why are removable ceiling tiles long-life property while a tree is short-life property (15 years) in most cases.

The arcane nature of which components can be depreciated over a short-life basis derives partially from the impact of investment tax credit guidelines, which influenced the rules. In addition, court decisions and IRS guidelines have created rules that are not intuitive. However, for most components, rules have been clearly articulated to define their depreciable life.

These rules and guidelines for methodology in the ATG clearly define the IRS’s position regarding cost segregation and benefit from authorized tax reductions.

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.

City:

Boston, MA
Washington, DC
San Francisco, CA
Dallas/Ft. Worth, TX
Bridgeport, CT
Orlando, FL
Las Vegas, NV
Hartford, CT
Tampa, FL
Baltimore, MD
Allentown, PA
Grand Rapids, MI
Syracuse, NY
Lancaster, PA
Detroit, MI
San Diego, CA
Akron, OH
New Haven, CT
El Paso, TX
Buffalo, NY
Palm Bay, FL
Springfield, MA
Manchester, NH
San Jose, CA
Chattanooga, TN
Lakeland, FL
Greenville, SC
Rochester, NY
Santa Rosa, CA
Cincinnati, OH

Cost segregation produces tax deductions for virtually all property types.

Property Type:

Car wash facility
Used car lot
Hotel
Movie theatre
Mini-warehouse
School
Discount store
Cold storage facility
Drugstore
Self-storage

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:

Health care facilities
Golf courses and country clubs
Transportation equipment manufacturing
Printing activities
Mineral product manufacturing
Textile product mills
Textile mills
Day care facilities
Beverage and tobacco product manufacturing
Warehousing and storage

O’Connor & Associates is a national provider of commercial real estate consulting services including federal tax reduction, cost segregation, due diligence, renovation upgrading cost analyses, tax return review and apartment inspections.

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Income Taxes (How Real Estate Investors Minimize Taxes)

Tax tips and tax help to assist taxpayers by describing optionsfor tax reduction and tax cuts through lawful tax deductions. Income taxes are too high. However, real estate investors have found many options to reduce the level of federal income taxes. Congress has provided a number of income tax benefits for real estate investment. These include depreciation, cost segregation, tax-free exchanges (1031 exchanges), casualty losses and capital gains treatment. Real estate investors who utilize these income tax benefits are able to reduce or even eliminate federal income taxes. Tax reduction reduces the risk endured by real estate investors since they have more liquid capital. Income taxes are calculated based on taxable income. Taxable income is calculated by deducting allowable expenses from revenue/income. The amount of revenue for real estate investors is generally a fixed number. There may be modest variances for cash basis versus accrual basis. However, it is typically difficult to materially modify the level of revenue. However, there are many options for judgment in calculating expenses. These include whether or not to capitalize or expense repairs, the level of debt and interest, and depreciation. The resultant tax cut can be substantial. Depreciation is a non-cash expense which increases total expenses and reduces taxable income. Real estate depreciation is based on the concept that improvements to land physically deteriorate overtime. Real estate owners are allowed to depreciate a portion of the cost basis to account for this physical depreciation. (In reality, the market value of improvements typically appreciate in value over five or 10 years even though depreciation is recorded for accounting purposes.) Real estate depreciation both defers and reduces federal income taxes. Depreciation defers income taxes from the time income is earned until the property is sold, or a gain from the property is recognized. (Real estate investors may defer recognizing the gain on the sale of property by utilizing a 1031 exchange.) Depreciation reduces federal income taxes by converting the character of income from ordinary income to capital gains income. The maximum income tax rate for ordinary income is 35% while the maximum income tax rate for capital gains income is 15%. Although some depreciation is recaptured at a 25% rate, it is possible to have much of the income shielded by depreciation recaptured at 15%. Furthermore, even if depreciation simply reduces the tax rate from 35% to 25%, and defers payment of taxes for a period of years, the savings are meaningful. Cost segregation is a specialized service real estate investors use to maximize depreciation. Cost segregation is typically performed by real estate appraisers or engineers to fine tune the real estate depreciation schedule. Cost segregation identifies and quantifies up to 130 components which qualify for short-life depreciation. The building structure is depreciated over 27.5 years (rental residential property) or 39 years (commercial property). Short-life property is typically depreciated over 5, 7 or 15 years. Obtaining a cost segregation report often allows real estate investors to allocate 20 to 40% of the cost basis to short-life depreciation. Shifting a significant portion of the cost basis from long-life components to short-life components can increase depreciation by 50% to 100% during the first five to seven years of ownership. Depreciation is a powerful income tax reduction tool specifically available for real estate investors. Real estate investors can magnify the benefits of depreciation by utilizing cost segregation. Click here for a FREE preliminary analysis of tax savings resulting from your property. Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions. City:

New York, NY
Bridgeport, CT
Hartford, CT
San Francisco, CA
Memphis, TN
Boston, MA
Los Angeles, CA
Baltimore, MD
Orlando, FL
Denver, CO
Birmingham, AL
Sacramento, CA
Honolulu, HI
Bakersfield, CA
Lakeland, FL
Dayton, OH
Milwaukee, WI
Santa Rosa, CA
Portland, OR
Jacksonville, TN
Colorado Springs, CO
Fresno, CA
Greenville, SC
Worcester, MA
Richmond, VA
Austin, TX
Louisville, KY
Albuquerque, NM
Springfield, MA
Syracuse, NY Cost segregation produces tax deductions for virtually all property types. Property Type:

Research and development
Auto salvage yard
Manufacturing/processing
Used car lot
Movie theatre
Night club
Motel
Truck stop
Commercial building
Greenhouse Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation. Industry:

Golf courses and country clubs
Building supply dealers
Truck transportation
Printing activities
Publishers
Chemical manufacturing
Warehousing and storage
Mineral product manufacturing
Food manufacturing
Computer and electronic manufacturing The Market Research and Consulting division of O’Connor & Associates benefits those who are involved in commercial property investing. Statistical data, ownership and management information is routinely gathered for four major land uses – multifamily, office, retail and industrial. This information allows investors to compare competitive properties, facilitate business decisions and track market and submarket performance. In addition the data is useful to brokers who for example continually monitor Houston retail center leasing, Houston office center leasing, Houston industrial center leasing, Houston apartment rental, Dallas apartment rental, Ft. Worth apartment rental, Austin apartment rental, San Antonio apartment rental.

This capacity to research, analyze and interpret market trends and the impact of specific transactions is a major reason for why developers and acquisition experts rely on O’Connor & Associates for market studies, feasibility studies, rent studies, tax credit studies, project design guidance, property performance evaluation and lease audits. O’Connor & Associates is an acknowledged source of trends in real estate investing and market activity.

Tax Reduction – a Result of Cost Segregation

Tax tips and tax help to assist taxpayers by describing optionsfor tax reduction and tax cuts through lawful tax deductions. Tax reduction and tax deferral are the primary benefits of obtaining a cost segregation study. Income taxes are a substantial burden for most real estate investors. Tax deductions help with this burden. While some level of taxation is necessary, it is both inappropriate and imprudent to pay more than your fair share. Income tax is based on net profit or taxable income. The basic formula for calculating taxable income is revenue less expenses (tax deductions). Expenses can include both direct payments to third parties (labor, rent, supplies, etc.) and non-cash deduction. The primary non-cash deductions are depreciation and amortization. Tax reduction (tax cuts) are a direct result of increasing tax deductions. The tax deduction benefit real estate owners gain from cost segregation is a higher level of depreciation. This non-cash tax deduction reduces taxable income and income taxes. For example, if the amount of depreciation increased by 0,000 (as result of a cost segregation study), taxable income would decrease by 0,000, and the owner experiences a ,000 reduction in taxes (based on 35% tax rate). Most real estate owners depreciate real estate based upon splitting the cost basis between land and improvements. The property owner or tax preparer typically estimates the portion for the land and attributes the balance to long-life improvements. Long-life improvements depreciate over 27.5 years for rental residential property and 39 years for commercial property While this simplistic method is lawful, it cheats the real estate owner of tax deductions. A cost segregation study identifies up to 130 short-life components. (Cost segregation is different than component depreciation, which was available until the early 1908s. However, the result of both is to increase depreciation and tax deductions during the early years of ownership.) These short-life components typically comprise 20-50% of the improvement cost basis and are depreciated over 5 years (20.0% per year), 7 years (14.29% per year) and 15 years (6.67% per year). Depreciation effectively changes the character of income from ordinary income to capital gains income. While the maximum income tax rate for ordinary income is 35%, the maximum rate for capital gains is 15% (less than half the ordinary income tax). This affects substantial income tax reduction. Increasing depreciation also affects deferral of payment of income taxes. Instead of paying taxes (at the ordinary income tax rate) in the year income is earned, taxes are paid (at the capital gain rate) in the year the property is sold. Cost segregation effectively generates an interest free loan (until the property is sold) and reduces the tax rate (from 35% to 15%). Click here for a FREE preliminary analysis of tax savings resulting from your property. Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions. City:

Miami, FL
Bridgeport, CT
Washington, DC
San Francisco, CA
Atlanta, GA
Dallas/Ft. Worth, TX
New Orleans, LA
New York, NY
Baltimore, MD
Hartford, CT
Indianapolis, IN
Wichita, KS
Detroit, MI
Charleston, SC
Providence, RI
Grand Rapids, MI
Jacksonville, TN
Boise, ID
Santa Rosa, CA
Columbia, SC
Columbus, OH
Oxnard, CA
Greensboro, NC
Allentown, PA
Harrisburg, PA
Louisville, KY
Fresno, CA
Akron, OH
Chicago, IL
Portland, OR Cost segregation produces tax deductions for virtually all property types. Property Type:

Manufacturing/processing
Tennis club
Retirement home
Auto service garage
Mini-warehouse
Single-tenant retail
Medical facility
Hotel
Retail
Vacant land Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation. Industry:

Wood product manufacturing
Warehousing and storage
Truck transportation
Transportation equipment manufacturing
Textile product mills
Textile mills
Real estate lesser
Publishers
Printing activities
Plastic and rubber products manufacturing O’Connor & Associates is a national provider of commercial property real estate consulting services including cost segregation studies, due diligence, insurance valuations, abandonment studies, business personal property valuations, commercial appraisals, feasibility studies, highest and best use analyses, and income tax.

Our services benefit owners of all commercial property types including multi-family housing, retail stores, hospitals, hotels, industrial properties, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping plazas and warehouse/distribution centers.

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Tax Deferral 1031 Exchanges and Cost Segregation

Tax deferral through 1031 exchanges, or tax-free exchanges of real estate, have become a popular method of tax deferral of capital gains taxes. Almost by definition, individuals who utilize the 1031 exchange option are reluctant to pay taxes that can legally be avoided. 1031 exchangers have asked if they can receive tax deferrals and enhance depreciation. The short answer is yes.

A complete answer needs to consider the remaining cost basis for the property that has been exchanged. If the remaining cost basis is minimal then tax deferral is minimal and, it is probably not financially feasible to utilize cost segregation. If the remaining cost basis (plus the amount of additional cash contributed) is at least 0,000, tax deferral is increased and it is worth reviewing whether cost segregation makes sense.

The total value of the new property is proportionally allocated to the remaining cost basis of the 1031 exchange property (and any additional basis from new investment). For example, if the five-year property is 10% of the value of the new property, and the remaining cost basis is ,000,000, a value of 0,000 (,000,000 x 10%) would be allocated to the five-year property.

One interesting issue is whether five-year property in the new property is considered personal property. To gain the tax deferral benefits, a 1031 Exchange must involve like-kind property. For example, if you sell a house and purchase a lake house, boat and jet ski as your exchange property, the boat and jet ski would be considered “boot”, taxable as ordinary income and the owner does not receive any tax deferral. The boat and jet ski are considered “boot” since they are personal property and the property that was sold was real estate.

Since five-year property is referred to as personal property in IRS documentation, there has been confusion regarding this issue. The IRS defers to state law regarding whether items are real property or personal property for the purpose of determining whether there is “boot.” Carpet and vinyl tile are both significant five-year life components. While they are considered personal property for depreciation purpose, they are considered real property by state law (in most states). Hence, they are not considered “boot.” and the owner can experience tax deferral.

Tax deferral from cost segregation is effective for 1031 exchange purchases provided the remaining cost basis is at least 0,000. Exchange buyers can defer taxes and reduce taxes on the old property and increase depreciation for the new property.

Click here for a FREE preliminary analysis of tax deferral and tax savings resulting from your property.

Cost segregation produces tax deferrals and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.

City:

Baltimore, MD
Houston, TX
Bridgeport, CT
Dallas/Ft. Worth, TX
Hartford, CT
San Francisco, CA
Washington, DC
Las Vegas, NV
Memphis, TN
Tampa, FL
Albany, NY
St. Louis, MO
Tulsa, OK
Columbus, OH
Santa Rosa, CA
Fresno, CA
Detroit, MI
Ft. Lauderdale, FL
Cincinnati, OH
Cleveland, OH
Scranton, PA
Indianapolis, IN
Albuquerque, NM
Wichita, KS
Milwaukee, WI
Stockton, CA
Little Rock, AR
Bakersfield, CA
Oklahoma City, OK
Nashville, TN

Cost segregation produces tax deductions amd tax deferrals for virtually all property types.

Property Type:

Regional mall
Truck terminal
School
Manufacturing/processing
Retail
Shopping center
Cold storage facility
Tennis club
Country club
Medical office

Almost every industry, including the following, can generate cost-efficient tax deductions and tax deferrals by using cost segregation.

Industry:

Arts, Entertainment, and Recreation
Laundry facilities
Furniture stores
Paper manufacturing
Machinery manufacturing
Metal manufacturing
Computer and electronic manufacturing
Golf courses and country clubs
Textile mills
Truck transportation

O’Connor & Associates is a national provider of commercial property real estate consulting services including gift tax valuations, insurance valuation,condemnation appraisals, tax deduction, feasibility studies, market research, property tax, income tax, feasibility studies, casualty loss, taxes, Tips and Tricks for Appealing Your Property Taxes in Fort Bend, Fort bend county appraisal, and Federal tax reduction. Appraisal services are provided for all commercial property types including multi-family housing, retail stores, hospitals, hotels, industrial properties, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping plazas and warehouse/distribution centers.

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