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
Sinks and drains
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.
Time is money. Property managers spend a lot of money on their time and this is true whether they are managing residential, multifamily or commercial properties. Often times, property managers may get caught up in the timing of things, letting their financial records and organization fall by the wayside. Not only does this cause added stress on the property manager, but it can also hurt the value of a property. When it comes time to sell a property or to refinance, proper financial details mean everything in determining how much the property is valued at.
Dan Pepper knows the importance of organizing and recording all the financial details of a property. Through his company, Palm Companies, a combined investment and property management firm, Dan oversees 190 multifamily units with nearly 50 units managed by Palm. With so many factors to keep track of, paying attention to financial details has become imperative in streamlining property management efficiency. This episode, Dan shares what he has learned about managing properties effectively and increasing property value by organizing and tracking financial details.
Automated Property Management Systems
streamline record keeping, bill pay and rent collection
Appfolio – good mid-market, fully-integrated automated system; 80+ units
Import photos or scans of bills for services and expenses into an easily accessible database
Capitalizing Expenses vs. Annual Expenses
Clearly define and categorize expenses that are capital improvements and what are annual expenses
Buyers can reconcile their investment concerns with detailed records
Lenders can asses precise values on properties
If unfamiliar, google search “capitalizing expenses”
Dan and Palm Companies are focused on multifamily properties ranging between 30-150 units in Southwest Florida. They focused primarily on property management ventures currently, but are open to viable multifamily deals. Palm Companies also has an interest in retail investments. Check out their website for more information.