This tax strategy can help you increase your cash flow and help reduce the current tax liability, both at the same time. If you are looking to hold your hard-earned cash, then say YES to Cost Segregation.
UNDERSTANDING COST SEGREGATION Cost segregation is one of the best tax-saving tools that can help a taxpayer accelerate depreciation and reduce tax liability if appropriately documented. As per the IRS, a building usually depreciates over a period of 39 or 27.5 years in the case of non-residential properties and 27.5 years in the case of residential properties. Let us imagine you own a residential rental property and do not opt for a CSS. Your property will depreciate based on the straight-line depreciation method i.e. 27.5 years. But, when opting for a CSS, a portion of the assets can be re-classified as personal property which will help depreciate the properties on a much faster time for tax purposes, i.e. 5,7 or 15 years. This helps you reduce your tax burden, thereby resulting in more profits. GETTING TO KNOW THE FINANCIAL BENEFITS OF COST SEGREGATION Cost segregation is a way to accelerate depreciation and helps in offsetting passive income. Below is a table that shows samples of an actual CSS for multifamily. The results are based on the use of 100% bonus depreciation as per the TCJA act of 2018 and are for the taxpayers who come under the 37% tax bracket. After the Tax Cuts And Jobs Act of 2017, the first-year bonus depreciation has increased from about fifty to a hundred percent, depicting how helpful cost segregation studies are for taxpayers. Conducting a CSS helps you get an idea of which assets qualify for a 100% bonus depreciation. Assets that have a tax recovery period of 20 years or less qualify for a cost segregation study. Used properties that were acquired or placed into service on or after September 28th, 2017, and before January 1st, 2021, qualify for cost segregation. THE BOTTOM LINE Always make sure conducting a cost segregation study makes sense for you. O’Connor’s cost segregation studies are IRS tested, CPA approved and warrantied for the duration of your ownership of the asset studied! Our studies not only detail all short-life components but also provide a breakout of all Units of Property (UoP) as required in the recent IRS Tangible Property Regulations. We can help you with assets you have owned for years!
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Property tax assessments for homes were increased by 6.7% for the tax year 2021, based on a review of 85,297 homes valued by the Fort Bend Appraisal District. Homes valued at $1 million or higher had the largest increases, average 8.4% higher than 2020.
Review of 85,297 homes valued at $300,000 or indicates an increase in assessed value of $35.6 billion, up 6.6% from $37.9 billion in 2021. Total property taxes for 2021 for homes valued over $300,000 would total $1036.5 million, based on a 2.7% tax rate before considering homestead exemptions. Fort Bend has 1508 homes valued at $1 million or higher. They are valued at $2.1 billion in 2021, up from $2 billion in 2020. Values were increased for 1,123 homes, reduced for 385 homes, and remained flat for 0 homes. Homes valued at $300,000 to 500,000 increased from $23.1 billion in 2020 to $24.7 billion in 2021, an 6.9% increase. Of the 65,992 in this price range, values were increased for 51,356, reduced for 14,611, and remained flat for 25. Luxury homes valued at $500,000 to $1,000,000 rose to $11 billion in 2021 from $10.5 billion in 2020, a 5% increase. This group of homes had the smallest level of increase, but still a sizable increase. Most homes in this price range saw an increase in the property tax assessment. Of 17,798 homes valued at $500,000 to $1,000,000, 13,576 were increased in tax assessment, 4,213 were reduced and 9 did not change. Fort Bend County homeowners are encouraged to protest their property tax assessment, regardless of whether it was increased, reduced, or remained flat. Fort Bend Appraisal District has limited staff to value well over 200,000 homes in Fort Bend County. Homes are valued using the cost approach. The only option for quality control is a property tax protest. Otherwise, Fort Bend Appraisal District staff is highly unlikely to review the estimate of value generated by their computers. There is no risk to appealing. The appraisal district and appraisal review board may not increase the assessed value due to an appeal. The only options are to reduce it or leave it the same. 85% of homeowners who appealed in 2019 were successful in reducing their property tax assessment. The property tax appeal deadline is Monday, May 17th. Read Here. A property tax check is one of the biggest checks you might write every year as Texas has the highest property tax rate in the US. Property owners nearly pay more than one-third when compared to the national average. But why? Here are three major reasons listed out that explain why Texas has the highest property tax.
Why property taxes are high in Texas
If a property tax reform is likely to happen, then the tax burden will be distributed. The state income tax would come into a form or a higher sales tax will be imposed to make up for the shortfall. However, this is unlikely to happen even though it would mean tax relief for many property owners.
Here is how O’Connor can help!
Property tax assessments for homes were increased by 4.8% for the tax year 2021, based on a review of 146,879 homes valued by the Dallas Appraisal District. Homes valued at $1 million or higher had the largest increases, average 5.4% higher than 2020.
Review of 146,879 homes valued at $300,000 or indicates an increase in assessed value of $90.12 billion, up 5.2% from $94.84 billion in 2021. Total property taxes for 2021 for homes valued over $300,000 would total $2593.7 million, based on a 2.7% tax rate before considering homestead exemptions. Dallas has 18,640 homes valued at $1 million or higher. They are valued at $35.62 billion in 2021, up from $33.85 billion in 2020. Values were increased for 6,231 homes, reduced for 990 homes, and remained flat for 11,419 homes. Homes valued at $300,000 to 500,000 increased from $31.17 billion in 2020 to $32.82 billion in 2021, an 5.3% increase. Of the 87,887 in this price range, values were increased for 23,318, reduced for 1,443 and remained flat for 63,126. Luxury homes valued at $500,000 to $1,000,000 rose to $26.39 billion in 2021 from $25.09 billion in 2020, a 5.1% increase. This group of homes had the smallest level of increase, but still a sizable increase. Most homes in this price range saw an increase in the property tax assessment. Of 40,352 homes valued at $500,000 to $1,000,000, 10,937 were increased in tax assessment, 1,031 were reduced and 28,384 did not change. Dallas County homeowners are encouraged to protest their property tax assessment, regardless of whether it was increased, reduced, or remained flat. Dallas Appraisal District has limited staff to value well over 200,000 homes in Dallas County. Homes are valued using the cost approach. The only option for quality control is a property tax protest. Otherwise, Dallas Appraisal District staff is highly unlikely to review the estimate of value generated by their computers. There is no risk to appealing. The appraisal district and appraisal review board may not increase the assessed value due to an appeal. The only options are to reduce it or leave it the same. 85% of homeowners who appealed in 2019 were successful in reducing their property tax assessment. The property tax appeal deadline is Monday, May 17th. Most property owners believe appraisal districts should cut taxable values in 2021. 93% of Texas property owners surveyed by O’Connor thought appraisal districts should reduce values in 2021 due to the impact of COVID.
Wise Appraisal District raised the overall taxable value of commercial properties by 10.2%, for the 8,143 commercial properties with 2021 values available. The 2021 increase in Wise Appraisal District taxable values is summarized below: Office 1.47% Land 6.30% Apartment 47% Taxable values were increased for 6 of 12 office buildings. The total assessed value increased to $0.0014 billion in 2021 from $0.0013 billion in 2020. The increases are surprising considering the impact of COVID on office occupancy. Land values soared 6.30%. The taxable value of vacant land rose from $0.045 billion last year to $0.048 billion in 2021. More than 33.1% of landowners saw higher taxable value; land assessments were increased for 52 of 157 tracts of land with 2021 values available. Demand for land for develop fell in 2020 due to uncertainty caused by COVID. Taxable values were increased for 78 of 79 apartments. The total assessed value increased to $0.026 billion in 2021 from $0.017 billion in 2020. The increases are surprising considering the impact of COVID on apartment occupancy. The property tax protest deadline is May 17th. Wise County commercial property owners are encouraged to appeal regardless of whether their value increased. There is a strong argument commercial values are lower in 2021 compared to a year ago due to COVID. Many if not most commercial properties are expected to have a lower taxable value compared to last year, but ONLY if the 2021 value is appealed. There are no flat fees or upfront costs with O’Connor, and never a fee unless we reduce your property taxes. Simple and fast enrollment is free at: https://www.poconnor.com/commercial1. or call 713 290 9700. Fast and free. |
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