Tuesday, December 27, 2016

Expert Tips: Cost Segregation Saves Thousands

What is Cost Segregation and how can it help your business?
Q&A with Chamber Member, David H. Trahan

What is Cost Segregation?
Cost segregation is a depreciation method recommended by the IRS that allows owners of commercial real estate owners (including multifamily properties), the option of accelerating depreciation on component parts of the improvements, thereby deferring  their income taxes and increasing their after tax cash flow.

How much can I save annually using this application?
Depending upon the property type, real estate owners can defer between $70,000 and $100,000 per $1,000,000 of value over 5 years by applying cost segregation.

Who can provide a cost segregation study? 
The IRS states that the most preferred method is an engineered based analysis.  The "most certain" method is performed by degreed engineers and includes a property inspection and a person who has experience in estimating and allocating costs.

How do I know whether a cost segregation study will help me on my property?
Since each property owner is unique, my company prepares a NO COST preliminary estimate on the amount a tax payer can be expected to save along with a fixed fee quote on the cost of having the study performed.  Because each tax payer is unique, only consultation with your tax professional will tell you whether cost segregation makes sense for you.

Does applying cost segregation increase my risk of getting my tax return audited?
On the contrary, the IRS recommends cost segregation and tax payers who apply cost segregation have no higher risk of being audited. In some cases owners who apply cost segregation have a lower risk of getting audited.

What types of property does cost segregation work for?
Any type of commercial or multifamily property including retail, restaurants, hospitality, warehouses, offices, self storage, apartments, motels, etc.

How large must my property be for cost segregation to make sense?
Cost segregation works on properties exceeding $600,000 in value.  The greatest benefit comes from those properties with greater finishes such as motels, restaurants, offices and retail.

I bought my property several years ago.  Can I now apply cost segregation?
Yes.  Owners can choose to switch to cost segregation at any time during  their ownership.  However the sooner one applies cost segregation the greater the tax benefits.  Over a long period of time the tax benefits diminish.  The only way to determine whether it is beneficial is to request a free preliminary analysis.

How does a study help me when I make improvements on the property?
There are some special rules and deductions that apply to real estate owners when they make improvements to their property that can be addressed by a cost segregation specialist.

What are the 2014 Tangible Property Regulations and how do they affect me?
The 2014 Tangible Property Regulations created the greatest changes to the tax code in 20 years and affected every commercial real estate owner in the U.S.  While cost segregation is optional, compliance with these new regulations are mandatory.  We work with your tax professional to ensure compliance with these regulations.

I am a tenant however I paid for my tenant improvements.  Can I benefit?
Yes.  The IRS says that whoever spent the money gets to depreciate the costs. 

By applying cost segregation, do I get more depreciation over the life of the property?
No. Assuming that you hold a commercial property for 39 years, you would get the same amount of depreciation.  With cost segregation, you are simply getting your benefits (depreciation) sooner. 
The question is "Do you want your money now so that you can invest the money in your business or would you prefer to wait till later to get the money?"

For more information visit www.dtrahan.com or contact me at dht@dtrahan.com or 832.971.2885

Wednesday, December 21, 2016

Expert Tips: Small Tasks for Big Change!

Expert Advice to handle the holidays and thrive in the New Year
 from our friends Alanna and Catherine from the Extra Hands team!
With the New Year comes a promise of a new start, a clean house, a new diet… this can all be overwhelming. At Extra Hands we have learned the importance of taking on one small project in your home at a time to eliminate stress and ensure a wonderful outcome. Instead of feeling overwhelmed by a full to-do list, focus on one area of your home at a time. 

 Tip 1: Consider a 12-month plan. This plan would allow you to commit each month to taking on a new project. For example, January would be the month to tackle that garage you haven’t had time to organize yet, and February would be the month to take on your attic and get all of your old memorabilia in order. Giving yourself a month per project will keep you motivated but also keep you from feeling as though you’ve taken on too much too quickly.

 Tip 2: As you begin your 12-month plan, focus on the perimeter before diving into the meat of it all. Start in the guest rooms before you begin in your own room. Your guests will be thankful to have an organized closet to place their things while they enjoy a relaxing stay in your home. Next, start on the junk drawers and kitchen panty. When your pantry has a place for everything, it makes preparing for guests and holidays even simpler!

 Tip 3: Speaking of guests, don’t let yourself procrastinate this holiday season. Make sure to create a preparation plan for cooking, decorating, cleaning, andhosting. First, begin by cleaning one room per day leading up to the holiday. This will ensure that the home is ready for guests but you will not have to devote a large amount of time to cleaning. Second, print out your recipes beforehand and make sure to store those specific ingredients together in the pantry. Having all of the ingredients together will make the process smooth and easy. Third, chop vegetables and other ingredients in advance. That way, ingredients are ready for blending, baking, and sautéing – all you have to do is combine the recipe!  

There are a lot of ways to prep for the holiday season and New Year that will eliminate tension and guarantee joy and relaxation. For more tips and even help with projects around your home, reach out to Extra Hands! It would be our pleasure to chop vegetables for your holiday meal, organize your master closet, or create a 12-month plan for you and your family.

Need more help? Contact us at theextrahands.com