Tag Archives: Bill Cooper
Did you know that 9 out of 10 property investors are overpaying on income taxes? Year after year, the Federal Government has continued to incentivize those who invest in Commercial Property.
The IRS has established guidelines that, if ignored, cause commercial real estate investors to pay more in taxes
than they should.
What guidelines are being ignored by Commercial Property Investors? Those revolving around Accelerated
Depreciation; known in the taxation world as Property Cost Segregation.
RAMIFICATIONS OF IMPROPER DEPRECIATION ALLOCATION
Most commercial property investors do not truly understand the substantial benefits of accelerated depreciation.
This is evidenced by our analysis of thousands of depreciation schedules over the years. We have found less
than 10% of investors are properly depreciating their properties. The most common misconception is, “I am
going to get this money anyway”. Is this a true or false statement?
Reasons Commercial Property Investors are Overpaying on Income Taxes
1. Capital Gains vs Ordinary Income Rates
Although the mechanics of these calculations are not always as simplistic as we will be making it for this
example, the short response is – increased depreciation leads to paying taxes at the capital gains rate as
opposed to the ordinary income rate. Since capital gains rates are likely much lower than the Investor’s income
tax rate, they would benefit from accelerated depreciation.
2. Time Value of Money
Simply put, your dollar is worth more today than it will be in the future. A tax dollar saved today therefore is
worth more than a tax dollar saved in the future. Why lock up a tax savings in your property for 27-39 years
when you can receive it today?
3. Catch-Up Depreciation
If you have not completed a Cost Segregation study on your property that you have held for a period of time,
did you know that you can capture your entire missed benefit immediately? The IRS allows you to complete a
481 adjustment thus enabling you to catch up all the missed accelerated depreciation into the current tax year.
This provision alone could save you hundreds of thousands immediately!
4. The Power of Cash in hand
You are a real estate “investor”. This means you understand the investing power of having funds in your hand
today. Cash today [in the form of tax savings] enables you to invest in additional properties. The benefits of this are exponential and allow continued growth of your investment portfolio. Correct allocation of real estate
depreciation is essential for Commercial Property Investors to effectively manage their tax situation. Are you
one of the 90% who are missing out on opportunities that 10% of your competitors are capturing?
Let’s look at how accelerated depreciation of commercial property can help your business. As a commercial property owner, how would you like to receive cash flow from tax savings of 7%-10% of your building cost within the first five years of ownership? That’s $70K-$100K for each $1M in building costs!
Accelerated Depreciation of Commercial Property – It’s YOUR Money!
Cost Segregation is an IRS-approved application by which commercial property owners can accelerate depreciation and reduce the amount of taxes owed. This savings generates cash flow that owners often use to reinvest in the business, purchase more property, apply to their principle payment or spend on themselves.
But we at STRYDE take it one step further with our “Engineered” Cost Segregation. Our engineers break down
your building into the smallest of components, e.g. carpeting, plumbing, & light fixtures, etc. to maximize your
depreciation. Engineered Cost Segregation is the answer.
Engineered Cost Segregation for Accelerated Depreciation of Commercial Property
The study accelerates the depreciation of your building/renovation components into faster depreciation categories such as 5-,7-and 15-year rather than conventional 27.5-and 39-year schedules. Five-and 7-year items might include decorative building elements and electrical for dedicated computer equipment. Fifteen-year items might include site utilities, landscaping and paving. This engineered cost segregation study results in a much higher depreciation expense and significantly reduced taxable income for the property owner. Best of all, the IRS ruling states cost segregation can be applied to all categories of buildings purchased or built since 1986, including renovations, and there is no need to amend your tax returns. This provides for the results to be easily applied to your tax return.
“I’m Already Doing That.”
It is true that a fair number of CPA’s may apply some of the benefits of Cost Segregation but an Engineered Cost
Segregation Study is the only way to truly maximize your benefits and get all of the depreciation and money your
entitled to. Our goal is to support your CPA or tax advisor with the most accurate cost segregation study results so you can realize maximum savings and increased cash flow. Our service utilizes a performance based method that is affordable for your commercial property application.
Do You Qualify for Accelerated Depreciation of Commercial Property
Even though 90% of all commercial properties do qualify for this benefit, there are a few rather broad minimum
requirements. They are: any building that was purchased or built within the last 20 years of $500,000 or more, OR,
has renovations within the last 20 years of $250,000 or more, AND, has paid federal taxes with in the last 3 years,
or plans to this year. There is also a “catch Up” method, in fact, 75% of our projects are older buildings.
FIND OUT WHY YOUR COMMERCIAL REAL ESTATE DEPRECIATION COULD BE WORTH 40% LESS IN 2019
For over 16 years, STRYDE has been delivering quality, affordable, engineer-based cost segregation studies to a wide range of individuals and businesses. Our team of experts can help easily apply the results to your current financials with your CPA or financial professional to assure successful results. In addition, our national coverage and expertise allows us to work with customers and properties across the United States.
Over the course of the 16 years we’ve been doing engineered Cost Segregation, we’ve had zero dismissed deductions and zero push-back, where the IRS says, “we’ll allow that deduction, but only this much ”
Our background allows us to provide not only the best possible results, but also strictly adheres to all IRS guidelines and provides our clients with all of the verifying documents and Audit defense.
HOW TO GET STARTED
Follow the IRS recommendation for application: Get an Engineered Cost Segregation Study. It’s easy:
- Call your local STRYDE affiliate for a no-cost preliminary property analysis to illustrate your potential savings.
- Engage STRYDE to begin your cost segregation study. The process is usually completed in four to six weeks, after which we provide the cost segregation study to you and your CPA.
- Your personal CPA will apply the results to your tax return and you will realize your tax savings dollars. This is your money!
- The NEW Tax Law provides a unique opportunity that you must act on during 2018 in order to fully capitalize on this change.