Find Real Estate 4 You

Casualty Loss

Massive loss victim may generate tax deductions loss of damage can occur as a result of a flood, hurricane, tornado, landslide or other natural disasters. The intuitive thought pattern is: "My apartment complex for $ 5,000,000 dollars suffered major damage totaling $ 1,500,000 for repairs and rent loss. Fortunately, I was completely covered for physical damage and loss of rental income, other than a small deductible. There is obviously no loss of damage I can claim as tax deduction, right? "
Tax deductions are the basis for the tax reduction. Tax deductions reduce taxable income but are not directly reduce federal income tax. For example, $ 100,000 of deductions tax reduces federal income taxes by $ 35,000 ($ 100,000 x 35%), assuming a tax rate of 35%. Most tax deductions require a cash expenditure (labor, material, supplies, utilities, etc.). A year expenditure is cash not required for certain property tax deductions and may not be required for loss of damage. Most real estate owners and investors does not account for losses victim as a source of tax deductions. Few investors claim tax deductions for damage loss of tax code federal permits. Let's review the criteria for a tax deduction for damage loss and acquisition of thought regarding a property who suffered an accident. Property owners suffer a loss when the damage value, immediately after the victim and insurance products is less than the value immediately before the accident. The complex issue is how the value of the property immediately after the accident. Consider an office park 1-story suburban in Mississippi who underwent 3-feet of flooding due to Hurricane Katrina. Also assume: 1) 8 feet sheet rock must be replaced throughout the building to rebuild, 2) even if the property was 90% occupied before the flood, occupation should be 5% while rebuilding occurs, 3) stabilized occupancy after renovation is not clear because some companies do can not return, 4) construction, will have 12-18 months because of work pressures, and 5) the owner has casualty insurance to rebuild, but has been no loss of rent / business interruption insurance. It is clear that the market value after the loss is less than the market value before construction costs of any accident. Other factors to consider are: loss of rent, the market risk that not enough tenants will be available after construction is completed, the cost of construction management, an illiquid market with few buyers immediately after the accident, the construction risk, interest rate risk (rates may increase during the construction period negatively affect the value) the risk that operating expenses could increase during the construction period (perhaps insurance) and compensation for the effort Entrepreneurial to induce a buyer to coordinate labor capital, management and return on capital in the process of reconstruction and liberation. Analysis by a careful evaluation can show the improvements have no value after the flood. In assessment missions conducted by the writer, loss of 10-30% loss of market value before the accident took place (in a straight-forward, defensible analysis) is typical. This can cause a loss significant harm (and tax deduction). For example, a property with a market value of $ 5,000,000 from a loss of 30% losses. While the victim is a serious prejudice to the owners, $ 1.5 million ($ 5,000,000 X 30%) tax deduction will mitigate the financial loss. The Congress allowed a tax deduction for damage loss to encourage investment in real estate. If you have the misfortune to suffer a casualty loss, take the hand offered by Congress and the tax deduction. Click here for a FREE preliminary analysis of tax savings for your property. Cost segregation produces tax deductions and reduce federal taxes across the country and in all size markets. Here are some examples of cities where cost segregation generates significant tax deductions City.:

• Memphis, TN
• San Francisco, CA
• New Orleans, LA
• New York, NY
• Hartford, CT
• Las Vegas, NV
• Los Angeles, CA
• Atlanta, GA
• Orlando, FL
• Miami, FL
• Louisville, KY
• Salt Lake City, UT
• Boise, ID
• Lakeland, FL
• Wichita, KS
• McAllen, TX
• Columbus, OH
• Ft Lauderdale, FL
• San Antonio, TX
• Durham, NC
• Allentown, PA
• Youngstown, OH
• Little Rock, AR
• Greensboro, NC
• Greenville, SC
• Kansas City, MO
• Raleigh, NC
• San Jose, CA
• Palm Bay, FL
• Honolulu, HI

Cost segregation produces tax deductions for virtually all property types, including the following: Property Type:

• regional shopping center
• Gas station
• Pharmacy
• Night club
• Supermarket
• Racket Club
• Garage Auto Service
• Airplane hangar
• Nursing Home
• Subsidized Housing

Almost all sectors, including the following, can generate tax deductions cost-effectiveness using segregation cost. Industry:

• Non-durable good wholesalers
• Durable good wholesalers
• Day care facilities
• Computer and electronic manufacturing
• Health care facilities
• Chemical Manufacturing
• Printing activities
• Storage
• Electronics and appliance stores
• apparel manufacturing

O'Connor & Associates is a national provider of commercial property services real estate consulting including studies of cost allocation, due diligence, income , The abandonment of fiscal studies, assessment of personal property, business appraisals, studies Feasibility Analysis optimum use, and audits of rental.

Our valuable services to owners of all property types trade, including multifamily housing, retail stores, hospitals, hotels, industrial buildings, manufacturing facilities, medical offices, commercial offices, restaurants, self-storage units, shopping malls, shopping centers and warehouse distribution centers /.
About the Author

Patrick C. O’Connor has been president of O’Connor & Associates since 1983 and is a recipient of the prestigious MAI designation from the Appraisal Institute. He is also a registered senior property tax consultant in the state of Texas and has written numerous articles in state and national publications on reducing property taxes. He continues to set the standard in direction and quality of our appraisal products, adding services ranging from business valuations and business appraisals to cost segregation analysis for income tax reduction.

Conserving farm real estate value (Land economics) …