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A taxpayer can substantially increase cash flow by employing a cost segregation and Energy study.
All property owners of taxable real or personal property, which is destroyed or value reduced (in whole or in part) may qualify for an assessed value adjustment. An application must be filed within three years of the date of destruction or reduction in value.
The American Tax Reduction Movement (ATRM) was founded by Howard Jarvis to develop and promote public policies advocating the reduction of property taxes throughout the United States. ATRM's goals are to educate the public and to support similar state groups on subjects useful to the individual and beneficial to the community, with the particular emphasis on the benefits of property tax reduction.
Cost Segregation Studies are an IRS approved method originating in 1997 which allows real estate investors to reclassify tangible personal property from real property and accelerate the depreciation of investment real estate property.
Your commercial property has assets which can be recouped over 5 years versus the traditional 39 year method. Many investors are becoming more aware of significant advantages offered by cost segregation studies which allow them to free the money trapped in the walls of their properties to minimize taxes and increase cash flow.
The reclassification of tangible personal property from real property and the difference in the depreciation allowed may be significant to you. Free valuable dollars which are presently being depreciated at 39 (or 27.5 - if commercial residential property) years and appropriately reclassify assets into 5, 7 and 15 year - reaping significant value and ROI. Put the time value of money to work for you!
Energy Tax Credits
You may be eligible for a tax deduction of up to $1.80 per square foot for improving the energy efficiency of your existing commercial buildings or designing high efficiency into new buildings. The Energy Policy Act of 2005 includes a tax deduction for investments in “energy efficient commercial building property” designed to significantly reduce the heating, cooling, water heating, and interior lighting energy cost of new or existing commercial buildings. To be eligible, the energy-efficient commercial building property—such as a state-of-the-art lighting system—must be placed in service between January 1, 2006 and December 31, 2013.
To qualify for the full deduction ($1.80 per sq. ft.) a building owner must make investments designed to reduce energy costs by at least 50%. A partial deduction, and more likely to qualify, of up to $0.60 per square foot is available for investments in one of three systems: lighting, heating and cooling or building envelope-designed to reduce energy costs by 16 and 2/3% (one third of the 50% requirement).
Tax deductions reduce your overall taxable income with the value of the deduction
dependent on your tax bracket. Tax credits, such as the ones provided for consumers in the 2005 Energy Policy Act, reduce the amount of tax you owe dollar for dollar.