One of the most thriving industries these days is real estate. For many investors, maximizing their returns or make their income flow quickly for their commercial real estate project. Projects like these often include buying a property, remodeling, expanding or constructing any kind of real estate. In order to do this, they will need a professional to assist them with cost segregation.
What is Cost Segregation?Cost segregation is an IRS approved method that allows investors to increase their cash flow or maximize their returns by accelerating the deductions or the depreciation as well as deferring the federal and state income taxes.
If you, an investor, purchases a property, the value does not just come from the structure itself. As much as 20% to 40% of both these components fall under tax categories that can be written off much quicker than the structure itself.
Any type of commercial property can be a candidate for cost segregation, especially when it has been in service after December 31, 1986. Note that any size also qualifies; however, lower valued properties might not be good candidates. Usually, it makes more sense for properties to have a $1 million depreciate cost basis or even more.
What is Cost Segregation Study?The cost segregation study is the first step in accelerating depreciation. The preliminary analysis will need every bit of information.
They will need data for exterior and interior components and the building structure itself. For this, they will send a team to physically inspect the property. Any available records will also be necessary. If you have any review of cost details and important blueprint for the property, it’s important you share it with your specialist.
Most of the time, you will need to schedule an appointment with a specialist as they’ll have a physical inspection. However, some can do it via the website.
The end result is a well-organized data of a detailed breakdown of costs.
When is the Best Time for a Cost Segregation Study?Anytime after you made a massive real estate project is good.
For new owners, the optimum time would be a year during the remodeling, purchase, or construction.
The Bottom LineAs a businessman or an investor, you owe it to yourself to know whether you qualify to get these large tax savings. Also, finding a capable specialist in the field will make all the difference in the world. You’ll be able to get at least 5 times the cost of the reform, giving you bigger savings. It will also effectively improve your cash flow, which is of big importance to new investors.
Know more: https://www.enrichedrealestate.com/
Most homeowners pay a lot of property taxes. Property taxes cannot be avoided but there are a few tricks that can help you see a lower amount on your property tax bill. Before we dive into the tricks, let us begin with understanding the property tax bill.
UNDERSTANDING THE PROPERTY TAX BILL & HOW IT IS CALCULATEDMost homeowners feel their property taxes are too high. But it is important to understand how the local government has reached that number on the bill. Many homeowners are not aware of how property taxes are calculated. There are two important aspects involved when it comes to calculating the property tax bill, tax rate and the market value of the property.
The tax rates are based on state law. Some states change them annually and some every five years. Local governments set up the tax rates as well and this is known as the mill rate.
The market value is determined by an assessor who is hired by the local government. The assessor determines the market value for a property by either visiting the property or completing the assessment remotely with a certified software. The tax office then multiplies the tax rate with the assessed value. Here is an example of how the property tax bill is calculated.
Let us imagine your home is being assessed at $300,000 and the tax rate is 1%. Your tax bill will be $3,000. In simple terms, the higher the assessed value, the higher the tax bill.
TRICKS TO LOWER YOUR PROPERTY TAX BILL
APPEAL YOUR PROPERTY TAX BILLEven after doing all that you can and not being able to see things happen your way, not to worry. A property tax appeal is another way.
Balancing the desire to own a beautiful house and pay less tax can be difficult. But a few things, as mentioned above, can help you reduce your property tax burden. Just a little extra effort can help you reduce your taxes.
Since Covid-19 began, real estate experts have seen major changes in business and execution of contracts. At present, some cities and states have paused transactions for real estate. Apart from that, market prices are being monitored as there is a difference in views as to how real estate pricing will fare during the pandemic. Some are expecting a downturn, while others feel that there will be minimal effects on how commercial real estate is priced down the line.
With that said, this is how Enriched Real Estate views the movement of real estate values in the era of the pandemic.
How Real Estate Reacts to Major Financial FalloutsIn the Covid-19 era, how can we understand “value” to make wise investment decisions both now and in the future? Will those decisions be based on the “old paradigm” or the new, unknown post Covid-19 paradigm? Following are material factors to consider:
Real estate experts around the world are attempting to understand the impact Covid-19 will have on all aspects of human activity “post-Covid-19”.
Yet, how is this possible given its unprecedented nature in a highly advanced global economy? In the real estate market how can we understand “value” to make wise investment decisions both now and in the future?
Will those decisions be based on the “old paradigm” or the new, unknown post Covid-19 paradigm? What will be the magnitude of the value loss? How long will recovery take? Just as importantly, how can investors be sure of “value sustainability” in real estate after seeing such a value decimation on Wall Street in two to three short weeks?
Archstone, in a unique collaboration with the National Council of Commercial Real Estate Fiduciaries (NCREIF), Archstone Appraisal Group, Enriched Data, and Value Expose sought to answer these questions from a variety of viewpoints.
Historical Perspective of Real Estate Values During Economic FalloutsThe unprecedented economic fallout from the COVID-19 pandemic prompted our team to study previous market corrections for guidance on how to value commercial real estate moving forward.
After analyzing the Great Recession, post 9/11, Dot-Com Bust, Real Estate Crash of 1990, market corrections of the 1970s and 1980s and the Great Depression, we concluded that the Real Estate Crash of 1990 is the most analogous prior period because:
ENRICHEDREALESTATE.COMProvides the highest quality and most detailed commercial real estate data, FREE, through crowdsourcing to supplement a national commercial real estate database with 32 million records.
As you may already know, Texas does not have a state property tax, the property tax rates are locally assessed. Property taxes are the major source of revenue and bring in most of the money to provide services offered by the local government. The Texas government offers special protections for the property owners in Texas and one such protection is the over 65 exemption.
WHAT IS THE PROPERTY TAX EXEMPTION FOR OVER 65?Homeowners aged 65 years or older qualify for this exemption. All homeowners aged 65 years or older qualify for a standard $25,000 homestead exemption. Other than this, the Texas school districts offer a $10,000 exemption for qualifying homeowners aged over 65. An additional exemption of $3,000 is offered by many cities and counties as well. Get to know about the additional exemptions by contacting the appraisal district.
WHEN DO I QUALIFY?You qualify for this exemption on the day you turn 65. To claim for this exemption all you have to do is submit proof of your age. This can be either a copy of your driving license or your birth certificate. In situations where the 65 or older homeowner dies, the surviving spouse continues to receive the exemption. However, the spouse has to be 55 years or older, must live in the house, own it, and apply for the exemption. In the case of a disabled person who is 65 or older, he/she can receive both the exemptions during the same year, but the taxing units must differ.
APPLYING FOR THE ADDITIONAL $10,000 EXEMPTIONYou have up to one year’s time after you turn 65 to apply to your appraisal district. Once your application is approved by the appraisal district you will receive the exemption for the entire year you turned 65. Ever since 2005, if your DOB is mentioned on the original homestead application form or any other written document submitted to the appraisal district about your homestead, you will automatically receive this exemption without applying. But you must be entitled to a general homestead exemption.
TYPES OF EXEMPTIONS There are different types of exemptions available to people who are aged 65 or older. These include:
BENEFITS OF QUALIFYING FOR AN OVER 65 PROPERTY TAX EXEMPTIONFor those who qualify for the over 65 exemption, there is something called the property tax ceiling. This automatically limits the school taxes to the amount you paid in the year you qualified for an over 65 property tax exemption. If your county, city, or junior college adopts the tax ceiling they might limit the taxes for an over 65 exemption. In situations where there are improvements made to the home, the tax ceiling increases. If there are no improvements made the school taxes might go down the tax ceiling but not above.
Apart from this, if you purchase or shift to a different residence in Texas, you have the option to transfer the percentage of the school taxes you paid. This will be based on the previous home’s school tax ceiling and is termed Ceiling Transfer. For this, you will have to relocate only within the same taxing unit. If the new house is in a different district, a certificate from the appraisal district for the previous home is required and it has to be taken to the appraisal district where the new house is located.
No one will enjoy paying a lot of property taxes. Having a little knowledge about the exemptions will help you save money every year. Read more on how Texas seniors can limit the impact of property taxes.
Buying commercial properties is riskier than buying a residential property. It requires complete analysis and comparison about the property. Only in depth analysis of commercial property will help you to succeed in the real estate industry. Here are some points to consider before buying commercial properties.
Do your analysis
Before buying a commercial property, you should have knowledge about the property value and how it is being calculated. Try to study about the current market value and keep yourself updated. Buying a commercial property isn’t like buying a home. You can make a final decision after looking at the clear records of the property. Because, it is very important factor to buy a new property. If any changes are made to the property, the value will be increasing. So, try to understand the impact of physical changes.
Location is the key
Location is the most important aspect of any real estate property. It is like a game changer for all real estate properties. When it comes to commercial property investment, you need to choose the correct location for targeting a valuable audience.
The property value will change at every location. Most likely metro cities have higher values in real estate.
You may be confused with the point that why location plays the biggest role in real estate?
Yes! Location is everything. Nowadays, people are expecting all the amenities such as Malls, Theaters, beaches, and parks to chill out during their holidays. So people will demand these amenities. For example: During the COVID-19 second wave, everyone is working from home and people expect proper internet connectivity to continue with their job without any interruptions. Also, they're expecting proper water and electricity.
In any activity, before buying the property, planning the budget is very essential and this is a crucial part which needs to be done before starting your search. The budget you have in hand will help you to decide the kind of property you will be able to buy. If you do not have enough money you could lease the property with enough down payment and pay the mortgage for the remaining amount.
Physical condition of the properties
If you are buying already built commercial property, make sure to visit the property once and know the reason behind why they are selling the property.
Study the property completely whether any damages were made physically. This will help you to understand the resale value of the property.
Availability of amenities
Before buying a property, you need to make sure that your amenities fulfill your needs. The things like water, parking, electricity, network connection also must be carefully looked before financing the property. It not only helps to run your business smoothly but also determines the resale value of the property.
Investing in real estate is the best decision you ever make, but it is very difficult and enticing. So make sure you don't make any wrong decisions and don’t hesitate to take the right decision. Be clear minded and do the process successfully. We hope you all enjoyed our article, visit Enriched Realestate to know more about real estate updates.
If you ask about the property taxes, most of the homeowners would likely tell that they pay too much taxes. Property taxes are real estate taxes that are paid by the homeowners, which is calculated by the local governments.
Revenue which is generated through property taxes are generally used to fund local projects and services such as local public recreation, education ect. You will never be free from the property taxes when you own a house, thus there are few simple tricks, where you can lower your property tax bills.
UNDERSTANDING TAX BILLS:
If you feel that you are paying too much property taxes, then it's important to know how your county assesses your tax bill on your house you own. Many homeowners just simply pay their property taxes, without understanding how they are calculated.
Mainly, property taxes are being calculated using two aspects, the current market value of your property and the tax rate. The rate at which the taxing authority sets the tax bill on your house is based on state law.
The accessor who is hired by the local government will estimate the market value of your property, that includes both land and the structure of your property.
ASK FOR YOUR PROPERTY TAX CARD:
The property tax card includes information about the size of the lot, the dimensions of the room and type of the fixtures located in your home you own.
As you review this card, if you notice any issue, then you can raise that issue with the tax assessor. Once the assessor receives the issue, he would either make the correction or conduct a reevaluation. So, it's important for you to ask for a property tax card and check whether the information of your home is correct.
ALLOW THE ASSESSOR ACCESS TO YOUR HOME:
Many people will not allow the assessor into their home. What typically happens if you do not permit the assessor is that the assessor will assume that you have made certain improvements. At last this results in a bigger tax bill.
Many states have this policy that, if the homeowner does not allow the assessor to view the property, then the assessor will automatically assign the highest value for that property. So allow the assessor to access you home.
LOOK FOR THE EXEMPTIONS:
Exemptions don't just apply for the religious or government organizations. You may also qualify for exemptions if you fall into certain categories like,
Check with your taxing authority to see if you qualify for an exemption.