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For real estate investors, it’s all about the bottom line. Investors are always looking at how they can save on costs and expand their cash-flow. While many real estate investors might be aware of certain tax-breaks that can be taken advantage of for investment properties, deferring taxes through cost segregation may be one that investors overlook. Institutional investors are probably aware of this tax advantage, but smaller, individual investors or those just starting out in real estate investing may be unaware.
For Michele Pasquale, the bottom line is helping investors to get more out of their properties. Michele is owner and managing member of Meridian Financial Solutions. By working directly with investor clients and through alignment with CPA firms, Meridian seeks to establish effective, long-term tax-planning strategies resulting in greater ROI potential for investors. Michele brings over 16 years of experience in real estate acquisitions and finance to help investors maximize cash-flow. This episode, Michele shares some things investors should know about deferring taxes through cost segregation.
- Tax-planning tool to help investors defer federal income taxes
- Allows property owners to accelerate depreciation, resulting in reduced taxable income levels
- Cost segregation study identifies all construction costs that qualify for accelerated depreciation
- Breaks costs into depreciation values of 15, 7 and 5 years, so they can be written-off in a shorter time-span
- Dependent on size and property type
- For buy-and-hold investors
Cost Segregation Qualifiers
- T.V. outlets
- Distribution panels
- Dated jacks
- Sinks and drains
- De-mountable partitions
- Floor coverings
When does Cost Segregation Apply?
- Buying, building or renovating a property
- Investors can go back 10 years or more on existing buildings and catch up on past depreciation
- Before building or renovating, factor in cost segregation studies into design plans
- Tax-planning strategy for 1031 Exchanges and Estate Planning
Tax-deferral, Not Tax Elimination
- Investors should be aware that costs segregation is a strategy for deferring taxes to increase cash-flow. Taxes are applied at sale.
Contact Meridian Financial Solutions at (561) 252-7282 for more info about cost segregation and get a free estimate for tax-deferral savings.