Internal Revenue Service Repair Regulations: What Does That Mean for You?

On September 13, 2013, the IRS issued the long awaited final regulations that govern how repair and maintenance expenditures should be treated. These final regulations replace the five different sets of temporary regulations that have been issued over the past nine years and are effective for tax years beginning on or after January 1, 2014.  The regulations provide rules on how repair and maintenance expenditures should be treated (capitalized vs. expensed).

Building Owners

Even though these final...

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Changes to Repairs and Maintenance Rules – General Asset Account Rules

We have recently written blogs discussing the changes in the Repairs and Maintenance rules and regulations.  We have reviewed the changes to the basic rules reviewing what type of expenditures have to be capitalized and looked at the changes to the definition of a Unit of Property (UOP), as it relates specifically to real estate.  In this blog, we will expand the discussion on these changes to cover the General Asset Account (GAA) rules, related election, and the importance of understanding and...

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The Federal Energy Tax Deduction Affects All

Section 179D, the federal energy efficient tax deduction, has no doubt had a significant effect on the real estate and construction industries recently. In the 2012 edition of our survey of the Northeast Ohio real estate and construction industries (full results to be released soon), we asked, “Have you implemented any sustainable building practices over the last 12 months?” The two most common responses to the question were “HVAC” and “lighting,” with 78% of respondents choosing each. This is...

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Changes to Repairs and Maintenance Rules – What to Know in 2012

Over the past few years, there has been increased tax planning in the area of repairs and maintenance.  Taxpayers have been able to take advantage of favorable tax rules in this area, and accelerate the deductions for these types of expenditures.  Unfortunately for the real estate world, the capitalization rules (compared to what can be expensed) have changed starting in 2012 and, as one may suspect, these changes are not in the favor of the taxpayer. I will review the changes from the old rules...

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How a Cost Segregation Study Can Help Keep Money in Your Business

 

If you own real estate, a cost segregation study is one of the best tools to help you reduce taxes and improve cash flow. Although a cost segregation study will not provide additional tax deductions, it will enable the taxpayer to accelerate a portion of the depreciation on the building. Cost segregation is the process of breaking out a portion of a building’s cost that can be depreciated quicker than the standard life of 39 years.Where should a property owner start when considering a cost...

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Changes to Section 179D Deduction

According to the code section 179D, the designer primarily responsible for designing the energy efficient aspects of government buildings (including new construction and rehabilitation) may be able to take the federal energy efficient commercial property tax deduction for doing so instead of the owner of the property. This deduction is passed to them from the government agency for which the building was designed as the government agency does not pay tax and therefore would not get the benefit...

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Special Delivery E-Newsletter: January 2011

This month's Special Delivery E-Newsletter includes the following articles:

Key Provisions in the New Tax ActThe recent tax...

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New Information Reporting Rules for Rental Property Expense Payments and the Expansion of Reportable Payments

The recently enacted Healthcare Reform and 2010 Small Business Jobs Act includes an assortment of changes for small businesses. It also contains two significant changes for information reporting by taxpayers. As indicated below, this includes individuals who own rental property as a passive investment.

Who is affected by these changes?

 

Under the present law, information reporting (via form 1096 and 1099) is required to the IRS by all persons engaged in a trade or business who make certain...

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Frequently Asked Questions About Cost Segregations

Many executives are curious about cost segregation studies, but are unsure how they work, or even if their business would benefit from one.Basically, a cost segregation study looks at specific components of your business’ facilities to find which components can be separated out and depreciated over shorter time periods therefore speeding up the related tax deductions. The true value of a cost segregation study is realized by looking at the time value of those tax deductions - being able to take...

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Cost Segregation Update: Street Light Depreciation

Based on a recent ruling, taxpayers can now recover the cost of all newly-installed street light assets more quickly than if they were classified as land improvements.The Tax Court recently ruled that street lights may be depreciated over seven years for federal tax depreciation purposes. This decision was based on the ruling that typical street light assets, which include poles, light fixtures, mounting hardware, and bases that can be relocated, and met the six criteria set forth in Whiteco...

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