Wealth Management Solutions
Real Estate Tax Planning

Cost Segregation: Cost segregation can provide real estate purchasers with tremendous tax benefits from accelerated depreciation deductions and easier write-offs when an asset becomes obsolete, broken or destroyed.

 

The key benefits of cost segregation are:

  • Substantial Reduction in tax liabilities
  • Immediate increased cash flow through accelerated depreciation
  • Enhanced real property financial returns
  • Corrects misclassified assets and provides opportunity to claim missed "catch up depreciation" from prior years in the current year
  • Renovations, remodeling and replacement will be less costly due to detailed breakdown of building components
  • Real estate property taxes may be reduced
  • Demolition and rehabilitation allows property owners to write off certain assets as opposed to capitalizing those assets

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1031 Exchange: Owners of business and investment Real Estate sell their property and buy other like kind property without paying the Capital Gains Tax. These transactions are known as deferred exchanges, or 1031 exchanges, and allow the investor to continue his investment in another property without losing investment equity to tax.


Charitable Bargain-Sale: Owner donates appreciated real estate to a qualified charity for a bargain-sale contract while charity sells the property to new buyer. Donor receives a current tax deduction; a current capital gains by-pass, and Charity pays a current or deferred income to Donor. The asset is out of the estate and a non-charitable beneficiary may be named.


Charitable Remainder Trust: Property owner donates appreciated real estate to a charitable remainder trust (CRT). The donor receives a current income tax deduction, possible deferral of accumulated depreciation and bypass of capital gains tax. Properrty may be managed or sold. The CRT may have multiple beneficiaries and be set up to pay a current or deferred income to beneficiaries. The asset is out of the estate and avoids all estate taxes. At least a ten percent residuum must be passed to a charity.

Often a family foundation and a wealth replacement trust is used in conjunction with a CRT.

 

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