Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home1/haradeep/articleside.com/configdb.php on line 8

Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home1/haradeep/articleside.com/article.php on line 88
Tax Reduction Affected by Cost Segregation

Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Tax Reduction Affected by Cost Segregation

By Patrick O Connor Subscribe to RSS | July 10th 2012 | Views:
loading
 
  



Tax reduction is just one of the benefits of cost segregation. Many real estate owners and tax preparers believe cost segregation simply defers payment of taxes. While they recognize it effectively generates an interest-free loan from the government, they do not understand it also provides tax reductions in most cases.

For most real estate owners (corporations are the exception) income is characterized as either ordinary income or capital gains income. It is not intuitive, but cost segregation changes the character of income from ordinary income to capital gains income providing tax reductions of up to 20%. This occurs because the additional depreciation is a tax deduction that reduces ordinary income. When the property is sold, it is recognized as capital gains income. Having more tax deductions increases tax reduction.

Since a portion of the cost basis is allocated to short-life improvements, some owners and tax preparers express concern that the depreciation will be recaptured when the property is sold (at a tax rate of 25-35%).

When a property is sold, the owner and the tax preparer typically collectively review the sales price and depreciation schedule to allocate the sales price between land, short life property, long life property, and profit. After reviewing the condition of short-life property, it is usually determined the value is similar to the depreciated basis (book basis). Hence the depreciation is not recaptured since there is no gain upon sale.

This is reasonable and appropriate since the short-life property depreciates more rapidly than the structure of the building. Short-life property includes items such as carpet, vinyl tile, paving, and parking lot striping. These items do physically depreciate from use and weather (if outdoors).

The capital gains rate (maximum of 15%) is less than half the ordinary income tax rate (maximum of 35%). By converting the character of income from ordinary income to capital gains income, cost segregation identifies tax reductions by reducing the reduces tax rate by over 50% (for income shielded by cost segregation). In addition, cost segregation defers payment of taxes from the year it is earned until the year the property is sold.

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:

Atlanta, GA ; New York, NY ; Memphis, TN ; Miami, FL ; Orlando, FL ; New Orleans, LA ; Hartford, CT ; Dallas/Ft. Worth, TX ; Washington, DC ; Denver, CO ; Akron, OH ; Buffalo, NY ; Jacksonville, TN ; Chicago, IL ; Toledo, OH ; Harrisburg, PA ; Birmingham, AL; Augusta, GA ; Lakeland, FL ; San Antonio, TX; Jackson, MS ; Little Rock, AR ; Pittsburg, PA ; Sarasota, FL ; Chattanooga, TN ; Manchester, NH ; Youngstown, OH ; Riverside, CA ; Syracuse, NY and Wichita, KS

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 and Vacant land

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

Industry:

Mineral product manufacturing , Electronic and appliance stores , Frozen food manufacturing , Non-durable good wholesalers , Furniture manufacturing , Food manufacturing , Chemical manufacturing , Automotive repair facilities , Amusement parks and Leather product manufacturing.

Patrick O Connor - About Author:
O'Connor & Associates is a national provider of commercial real estate services including federal tax reduction,Commercial Real Estate Appraisal, cost segregation, feasibility studies, insurance valuations, Houston Property Appraisal, gift tax valuations and real estate market studies.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/finance-articles/tax-reduction-affected-by-cost-segregation.htm

Related Finance Articles Subscribe to RSS

Many Things to consider when Finding a Glendale CPA
Published by Darrell Fore on August 9th 2012 | Finance
Business owners have the choice of hiring a Glendale CPA as a complete time employee or outsourcing ...
 
Unsecured Personal Loans : No Risk Advantage
Published by Lucy Mark on May 3rd 2012 | Finance
In order to get a good deal first recognize your needs. Don’t go in for a lender giving loan at ch...
 
Why Good Customer Service is Essential when Choosing a Bank
Published by Jess Hall on November 25th 2011 | Finance

Good customer service is the hallmark of a good bank. Ideally, it should be easy to get prompt, ...
 
Reap the Benefits of ACH Processing
Published by Angie Turner on May 22nd 2012 | Finance
It is a common knowledge that the rising inflationary trend has cast an additional burden on every k...
 
Credit Cards for People with No Credit to Build Credit History
Published by Elissa Joyce on December 5th 2011 | Finance
It will be easier to understand that your credit history is the primary reason for acceptance or rej...
 
Get a Worry: Free Soul with Life Insurance Coverage
Published by Elissa Joyce on December 14th 2011 | Finance
Children even know how beneficial a Life insurance policy is. It mitigates your anxiety in regard to...
 
No Credit Check Loans Canada - Resolves Financial Problems without Credit Check
Published by Simon Ray on February 1st 2012 | Finance
No credit check loans Canada is an excellent alternative to resolve all your urgent and temporary fi...
 
Debt Settlement and its companies
Published by Rajkumar Kaushal on May 17th 2012 | Finance
Debt settlement Colorado has companies of debt settlement which is one debt agency of the state that...
 
Securing your vehicle with Arkansas auto insurance
Published by Auto Insurances on January 14th 2012 | Finance
Who doesn’t want his or her vehicle to be secured from every kind of accident or incident? Of cour...
 
How Interest Rates are Determined on Business Loans
Published by Vikash Kumar on April 28th 2012 | Finance
If you ever have applied for a business loan, you would have wondered how and what criteria they use...
 
Practical ideas on how HFT Has effects one particular Element about the Hard anodized cookware Buy Side Speculator
Published by Sidney H Richardson on July 31st 2012 | Finance
Practical ideas on how HFT Has effects one particular Element about the Hard anodized cookware Buy S...
 
How to Prepare and Submit Your Tax Returns Easily
Published by Clemencia Summers on May 18th 2012 | Finance
Paying taxes is a part of your life as an employee or as a businessman....
 
The Duties and Responsibilities of a Manhattan Financial Planner
Published by Alice Hussyy on July 17th 2012 | Finance
In case of manufacturing activity the capital required would be comparatively higher than the capita...
 
Kredi Karti Borcu Taksitlendirme aka KKBT is the Only Way out of a Credit Card Debt
Published by Hazar Umutay on May 24th 2012 | Finance
Sir Benjamin Franklin hit the nail when he said you’d “better go to bed supperless, than to rise...
 
IRS Audit – the Role You Play
Published by Jacob Smith on May 23rd 2012 | Finance
There are ways by which the IRS picks a return for an audit, and also ways that you can avoid an aud...
 
Forex Trading and Stock Trading – Get Some Useful Information
Published by Hosiconnon on June 26th 2012 | Finance
Nowadays Forex trading and stock trading can be easily tracked, thanks to the electronics; using pre...
 
Finding the Top Debt Settlement Companies
Published by on January 30th 2012 | Finance
Your start-up has not taken off the way you had thought expected and you are now fighting hard to st...
 
Doorstep Cash Loans - Fast Cash in Your Pocket
Published by Satty Jones on December 30th 2011 | Finance
Doorstep Cash Loans are very flexible loan services and avail you cash at right your doorstep. So ap...
 
Radiology Medical Billing Service- Know Some Vital facts
Published by Activemds on January 24th 2012 | Finance
Being an entirely independent branch of medical science radiology is characterized by significantly ...
 
XBRL Backup Software for Managing Financial Data
Published by Bryan on April 3rd 2012 | Finance
XBRL is a backup software used by many medium to large companies in order to manage their financial ...
 
The Benefits of Financial Advice Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
You work hard for your money and you therefore need to ensure that you properly manage it so that yo...
 
The Benefits of Financial Advice Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
You work hard for your money and you therefore need to ensure that you properly manage it so that yo...
 
Pensions in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Pension is a money received after retirement or end of a work agreement. It is mostly associated wit...
 
Pensions in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Pension is a money received after retirement or end of a work agreement. It is mostly associated wit...
 
Pension in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Leeds has many financial advisors especially those dealing with pension. Pension is very important e...
 
Pension in Leeds
Published by Fredrick Gavin on August 24th 2012 | Finance
Leeds has many financial advisors especially those dealing with pension. Pension is very important e...