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View AllSafe Harbor Regulations For Tax Deductions
For those of you who missed last night’s meeting, Here is a brief synopsis of the Safe Harbor regulations that real estate owners should be using on a yearly basis to increase cash flow and reduce their tax liability. TAX SAVINGS OPPORTUNITIES: THREE SAFE HARBORS FOR PROPERTY OWNERS How the IRS Safe Harbors Can Help Property Owners Deduct More Costs Now The IRS tangible-property regulations provide several safe harbors that can allow qualifying costs to be deducted currently rather than capitalized and depreciated over many years. ________________________________________ 1. DE MINIMIS SAFE HARBOR ANNUAL ELECTION PROPERTY BY PROPERTY USE Small-Dollar Property & Improvements The De Minimis Safe Harbor allows qualifying taxpayers to expense certain small-dollar purchases that otherwise might have to be capitalized. Current thresholds: • $2,500 or less per invoice or item. The taxpayer generally must have a consistent accounting policy to expense these items and must make the appropriate annual election with the tax return. Example: A property owner purchases $2,000 of qualifying equipment or components. If the requirements are met, the cost can be expenses and not capitalized as long as it is not part of a major improvement. ________________________________________ 2. ROUTINE MAINTENANCE SAFE HARBOR ONE TIME STATEMENT ON TAX RETURN Recurring Repairs & Maintenance This safe harbor can allow certain recurring maintenance costs to be deducted rather than treated as improvements. Generally, the work must: • Be a recurring activity; • Be expected because of the property's use; • Keep the property in ordinarily efficient operating condition; and • Be reasonably expected when the property is placed in service, to occur at least twice in a 10-year period. For buildings and building systems, the expectation is generally that the activity will be performed more than once during the 10-year period beginning when the property is placed in service. Examples may include: recurring inspections, cleaning, testing, and replacement of worn or damaged components with comparable parts. Important: The safe harbor does not apply to betterments or adaptations to a new or different use. ________________________________________ 3. SMALL TAXPAYER SAFE HARBOR ANNUAL ELECTION ON TAX RETURN A Special Rule for Smaller Property Owners A qualifying small taxpayer may elect to deduct certain amounts spent on a building rather than capitalize them as improvements. Generally, the taxpayer must have: 1. Average annual gross receipts of $10 million or less; 2. Building property with an unadjusted basis of $1 million or less; and 3. Total annual spending on repairs, maintenance, improvements and similar activities that does not exceed the lesser of: • 2% of the building's unadjusted basis, OR • $10,000 maximum. The election is made annually for qualifying buildings by attaching the appropriate statement to the timely filed tax return. I’d be happy to provide a complimentary, no-cost and no-obligation review of your real estate portfolio to identify potential tax-saving opportunities. David DeLamar, CSSI Lubbock.costsegregationservices.com 806.773.6382 Cost Segregation Services, LLC
David DeLamarBallenger Neighborhood Assignment Available
I have a contract that I am looking to assign to an investor! Address: 1306 41st St Beds: 2 Baths: 1 Sqft: 967 Garage: enclosed (1 bay) ARV: $95-102k Rehab: $40-45k Asking Price: $29k Occupancy Status: Vacant (easy to show) Google Link: https://drive.google.com/drive/folders/1aeHZeCOBhCFQxh6nnqsHMEdsi7oKv3ot?usp=drive_link If the link does not work, text me your name and I'll send you the drive 806-632-3725
Cost Segregation Studies
Hello Lubbock REI, I wanted to take a quick moment to introduce myself and Cost Segregation Services, Inc. (CSSI) to the Lubbock REI group. For the past 17 years, I have served as a Senior National Representative with CSSI, helping real estate investors identify opportunities to accelerate depreciation and improve cash flow through tax savings. I’ll be presenting to the Lubbock REI group next week and look forward to connecting with everyone. Please feel free to reach out if you’d like to have a no-obligation conversation about how cost segregation will create additional cash flow through tax savings on commercial properties, short-term rentals/ABNBs, and traditional rental properties. I look forward to meeting you! Best Regards David DeLamar
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