For those who have recently purchased or built a new building, or even substantially remodeled an existing building that they own, faster write-offs are only a cost segregation study away. A cost segregation study identifies property components and their cost, allowing owners to maximize their current depreciation deductions by using the shorter lives and faster depreciation rates available for the qualifying parts of the property. But the overall benefit may be limited in certain circumstances. This article explores some of the details, while addressing the concern some have as to whether a cost segregation study might trigger an audit.
Douglas Rutherford, CPA
Vacation homes provide tax planning opportunities, pitfalls
If you own a vacation home, it pays to consider the income tax implications, especially if you plan to use the home for both personal enjoyment and rental income. In some cases, minor adjustments in the way you use the home can reduce your tax bill.
Cash-on-Cash Return with Equity (COCE)
The primary objective of investing in real estate is for cash flow and appreciation, but just because an investment property has a positive cash flow and appreciates does not make it a “buy.” A property must produce enough cash flow and equity to provide an acceptable return for the amount of cash invested [1] . In other words, the return on investment needs to be adequate enough to make the investment successful. So, if cash flow and equity are major components of the investment strategy, how does one properly measure them against the needed investment capital?
Don’t lose out on rental real estate losses
If a person owns rental properties, there’s a good chance at least one of them will generate a loss during ownership. But the passive activity loss (PAL) rules can make it difficult to deduct those losses. If rental real estate is a significant activity, it pays to review the situation to determine whether one meets the IRS’s definition of “real estate professional.” This article explains some of the circumstances in which one may qualify and how it might be possible to convert passive losses into non-passive losses, creating substantial tax benefits.
Personal use of employer provided cell phones generally nontaxable
Close to one year after cell phones were removed from the “listed property” category of Code Sec. 280F, IRS has explained the practical consequences of the change. In sum, where an employer provides employees with cell phones primarily for noncompensatory business reasons,
Crunching Now Will Save You From Being In A Crunch Later
As a CPA specializing in the real estate industry and working with hundreds of real estate investors, one of the biggest mistakes I have seen investors make over the past few years is buying real estate without first crunching the numbers to determine the property’s cash flow and whether the property will generate a respectable return on investment. Although it is true