They sound nice, but real estate investors may think that they are not so easy to come by. Those investors who do happen upon them find usually find themselves bogged down by the IRS’ strict stipulations surrounding them.
Tax credits are, in fact, tools set in place to help investors grow their portfolios and while they may seem complex, they are accessible to any investor willing to do a little extra leg work.
While nobody should be expected to know the entire IRS tax code, real estate investors should be aware of some very helpful tax credits that can be applied to their assets.
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.
Listeners of the show will remember Jillian Bandes who, in episode 74, discussed what real estate investors should consider about building structure when looking at commercial multifamily investing. The project manager for Bandes Construction covered 6 hot topics on building structure and maintenance that investors should be aware of with commercial multifamily properties.
In this episode, we discuss Jillian’s first investment property….a single family home with an ajacent rental apartment. She discusses razing the property, dealing with the local code and building officials and her plans on whether to rent the units or live in one and rent the remainder. The property was purchased through a foreclosure and we cover the online methods now employed by Pinellas County. Not only is this project about a potential home and investment, but Jillian is passionate about blazing the trail for urban renewal and redevelopment in St Petersburg’s core and her unit is in the heart of a rapidly changing area.
Residential property permitting and zoning regulations differ from commercial properties
Choose property in an area you are familiar with
Walk surrounding neighborhood
If investment property, define target rental market
If foreclosure property, know state of title (liens)
What is the property zoned for? Is property up to code? Accessory buildings permitted?
Work with local and municipal officials
St. Petersburg, Florida
Undergoing immense urban growth period
Investors need accessibility to invest in properties with potential for redevelopment/renewal
South St. Pete offers development opportunity and reasonable prices w/ proximity to cultural amenities
Jillian extends a big thank you to Carlyn Neuman of Tampa’s 360 Realty for helping to navigate online foreclosure bidding as well as to Katrina Trump of Bank of Tampa, for assisting with securing financing.
One of the downsides for real estate investorsbuying single family homes has always been the large amount of time and financial investment it takes to certify an asset. Buyers most conduct thorough due diligence to verify a property’s physical condition, legal standing and yield potential. Buying single family homes can be a stable financial option, but it requires a lot of personal commitment that some investors just can’t afford.
Roofstock may provide investors with a solution to this problem. This episode, RoofstockCEO Gary Beasley stops by to talk about the new platform that is changing the way investors are buying single family homes. By removing the stress and mess of the due diligence process, Roofstock can greatly decrease transaction fees and increase market fluidity by providing investors with a certified, reliable and transparent marketplace for buying single family rental homes. They are also proving that buying leased single family homes can be a greater asset than vacant singe family properties.
Launched in FL – Tampa, Orlando, Cape Coral, Jacksonville, Miami
Also Atlanta and California
Grow to 10+ markets in U.S.
3rd party valuation report, title report, property inspection, rent surveys, financial calculator est. returns based on several rental situations, vets tenants and property managers
Buyer freed from operational component of investing
Buyers able to rely on surety of data
Cheaper, More Effective than MLS
Roofstock – 2.5% transaction fee from sellers; .5% marketplace fee from buyers : MLS – 6% transaction fee
Standardized marketplace of available, leased single family homes
Investment fund opportunity
Recent launch of 100-property fund
Provides readily available market for investors in need of exchange property
To find out more about the great services Roofstock offers investors buying single family homes, check out their website! You can also contact Gary directly at email@example.com or the senior client adviser, firstname.lastname@example.org
Real estate markets are entering a new phase. Nationally, investment markets are evolving to suit new demands from consumers. Here in Florida, theses changes are causing ripples of concern for investors and residential developers. What does the generational shift mean for the future of residential real estate and what can investors and and residential developers due to anticipate and adapt to these changes?
Jean Francois Roy, Founder and President of Ocean Land Investments shares with us his story and discusses the importance of flexibility as a residential developer and investor to find success in the market. Beginning his foray into residential real estate in his native Quebec, Canada, Jean Francois focused on developing high-end retirement living spaces. Following the American economic recession in the early 1990s, Jean Francois moved his venture to Florida, focusing on Ft. Lauderdale markets. Jean Francois quickly realized that flexibility and understanding the demands of the market was imperative for the success of any residential developer or investor. Ocean Land Investments continues to be a leading residential real estate firm due to Jean Francois’ drive and flexibility.
Residential Developers: Purchase land during market/economic slumps
Markets with high populations reduce vacancy risks
Adapt to market demands
In Ft. Lauderdale, high retirement-age demographic good for multi-family residential (apartments, condos)
Recognize consumer trends
“Going green” – buyers and tenants willing to pay premiums for environmentally-geared projects/renovations
Shift towards “conservative” structures from “extravagance” of 2000s
Be amenable to joint ventures and refurbishment projects as opposed to new developments
Be wary of overambitious or amateur developers straining the market
To contact Jean Francois Roy or to find out more about investment, leasing, or purchasing options with Ocean Land Investments, call the office at (954) 558-3187 or visit their website
Jay Smith, CEO of A Snoop Inspections, is a veteran in his field of property inspection. Jay possesses over 30 years in property inspection experience as well as hands-on knowledge of building construction. Jay has an invaluable insight into the key concepts of inspecting properties.
Property inspections can cause even the most seasoned real estate investor to shudder. Not only do inspections have the potential to turn up devastating issues for investors close to finalizing a deal, under-qualified inspectors may cost an investor thousands of dollars in corrective aggravation. Recent changes to insurance policies and coverage in Florida have led to increased concern over property inspections and their impact on real estate investment. Commercial investors need to be especially careful as there are many more aspects to commercial property inspection as opposed to residential. This episode will cover six hot spots or areas of focus for any investor to cover when inspecting properties.
Out-dated wiring methods may preclude properties from meeting current insurance requirements
Aluminum wiring dating mid 1960s-1970s a prevalent issue; Cloth wiring; Knob-and-tube wiring
No safety outlets by water areas source of concern
Major area of concern when inspecting properties. Damage can be detrimental to property and repairs costly.
Look for flat roofs or areas where water pools
Leaks cause major damage
A/C units on roofs – water damage from condensation, impede accessible roof maintenance. New FL building codes require roof-units be on raised platforms
Changes to FL insurance coverage a important concern for new buyers
Standards for coverage have changed over recent years
Require more detailed inspections, won’t insure certain construction methods/materials
Insurance coeerage under previous owner will not extend to new buyer
Costly and potentially dangerous inspection issue
Look for long, horizontal cracks in and around structure
$2000 geo-technical survey
Serious issue in FL
Difficult to asses severity or extent of infestation
Especially an issue in vacant or untended properties
Inspector Due Diligence
In FL especially, determine certifications of inspectors prior to selecting
FL requires Home Inspector license only
International Association of Home Inspectors – largest H.I. association in U.S.
For specific issues, contact specialists (i.e. mold inspector, master electrician, professional roofer)
To contact Jay for information on inspecting properties or to inquire about his own property inspection services, visit his website: www.a-snoop.com or call (813) 345-2600