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Tax reduction and tax deferral are the primary benefits of obtaining a cost segregation study. Income taxes are a substantial burden for most real estate investors. Tax deductions help with this burden. While some level of taxation is necessary, it is both inappropriate and imprudent to pay more than your fair share.

Income tax is based on net profit or taxable income. The basic formula for calculating taxable income is revenue less expenses (tax deductions). Expenses can include both direct payments to third parties (labor, rent, supplies, etc.) and non-cash deduction. The primary non-cash deductions are depreciation and amortization. Tax reduction (tax cuts) are a direct result of increasing tax deductions.

The tax deduction benefit real estate owners gain from cost segregation is a higher level of depreciation. This non-cash tax deduction reduces taxable income and income taxes. For example, if the amount of depreciation increased by $100,000 (as result of a cost segregation study), taxable income would decrease by $100,000, and the owner experiences a $35,000 reduction in taxes (based on 35% tax rate).

Most real estate owners depreciate real estate based upon splitting the cost basis between land and improvements. The property owner or tax preparer typically estimates the portion for the land and attributes the balance to long-life improvements. Long-life improvements depreciate over 27.5 years for rental residential property and 39 years for commercial property

While this simplistic method is lawful, it cheats the real estate owner of tax deductions. A cost segregation study identifies up to 130 short-life components. (Cost segregation is different than component depreciation, which was available until the early 1908s. However, the result of both is to increase depreciation and tax deductions during the early years of ownership.) These short-life components typically comprise 20-50% of the improvement cost basis and are depreciated over 5 years (20.0% per year), 7 years (14.29% per year) and 15 years (6.67% per year).

Depreciation effectively changes the character of income from ordinary income to capital gains income. While the maximum income tax rate for ordinary income is 35%, the maximum rate for capital gains is 15% (less than half the ordinary income tax). This affects substantial income tax reduction.

Increasing depreciation also affects deferral of payment of income taxes. Instead of paying taxes (at the ordinary income tax rate) in the year income is earned, taxes are paid (at the capital gain rate) in the year the property is sold. Cost segregation effectively generates an interest free loan (until the property is sold) and reduces the tax rate (from 35% to 15%).

Cost segregation produces tax deductions and reduces federal income taxes across the country and in every size market. Below are just a few examples of where cost segregation generates meaningful tax deductions.

City:

• Miami, FL
• Bridgeport, CT
• Washington, DC
• San Francisco, CA
• Atlanta, GA
• Dallas/Ft. Worth, TX
• New Orleans, LA
• New York, NY
• Baltimore, MD
• Hartford, CT
• Indianapolis, IN
• Wichita, KS
• Detroit, MI
• Charleston, SC
• Providence, RI
• Grand Rapids, MI
• Jacksonville, TN
• Boise, ID
• Santa Rosa, CA
• Columbia, SC
• Columbus, OH
• Oxnard, CA
• Greensboro, NC
• Allentown, PA
• Harrisburg, PA
• Louisville, KY
• Fresno, CA
• Akron, OH
• Chicago, IL
• Portland, OR

Cost segregation produces tax deductions for virtually all property types.

Property Type:

• Manufacturing/processing
• Tennis club
• Retirement home
• Auto service garage
• Mini-warehouse
• Single-tenant retail
• Medical facility
• Hotel
• Retail
• Vacant land

Almost every industry, including the following, can generate cost-efficient tax deductions by using cost segregation.

Industry:

• Wood product manufacturing
• Warehousing and storage
• Truck transportation
• Transportation equipment manufacturing
• Textile product mills
• Textile mills
• Real estate lesser
• Publishers
• Printing activities
• Plastic and rubber products manufacturing

O’Connor & Associates is a national provider of investment property consulting services including cost segregation studies, due diligence, insurance valuations, tax reduction, property tax, market research,expert witness,private bond activity,taxes,residential property appraisals,Tarrant Central Appraisal District,Tips and Tricks for Appealing Your Property Taxes in Dallas,Dallas county appraisal and Federal tax reduction. Our appraisers are competent to appraise virtually all types of property including land, neighborhood shopping centers, warehouses, bowling alleys, motels, mobile home parks, self-storage units, retirement homes, multifamily housing, movie theatres, veterinary clinics, single-tenant retail centers, funeral homes, bars, amusement parks, hospitals, schools, night clubs, apartments and medical facilities.

Like many American’s last month I went and visited my tax mistakes to prepare and file a federal tax return. Many thoughts raced through my mind on how to spend my newly found fortune, new clothes, a well-deserved night out or possibly pay down the credit card. Although all of them sounded appealing, like many of us I used my tax return to pay my property tax bill. This is a common way for many; use our tax return to pay our property tax.

This vicious cycle has been played out every spring since I became a homeowner. It was not until last year that I thought about all of the planning and preparation that went in to my federal taxes only to glance at my property tax bill and write a check without question or a second thought.

After utilizing many available tax deductions and credits many may find that the amount of federal taxes paid is less than the amount of their annual property tax.

When we examine our local property tax the same concepts apply as federal tax, however we rarely take notice. For example most municipalities allow for tax deductions and credits to offset the amount of property tax due. Many states give you a lower tax rate just for owning the home as your primary residence, being a veteran, or if you are over 65 years of age to name a few.

While these credits and deductions are important to take note of the more important issue is what your local government has valued your home at. This can often make the most impact to taxpayers. Known as your assessed value, this is what is used to multiply your local tax rates in order to arrive at the amount of property tax you will owe for the year. This can be one of the most overlooked aspects to homeowners, especially as of late in this current housing meltdown.

It is first important to find what your local assessor has for a property description of your home as mistakes often occur. Verify the square footage, the number of bedrooms and other data on your property record card is correct. Most assessors never look at your home, rather employ mass appraisal systems and rely on public record information to assess your homes value.

Why are we entrusting our local taxing authority to tell us our homes value? According to the Tax Foundation over 60% of homes in America are over assessed. More than half of us are paying too much property tax. All areas do allow taxpayers to dispute their annual assessment while less than 5% take corrective action. Maybe the IRS should take note of our local taxing authorities and make certain assumptions about everyone’s annual income, I would imagine a few more than 5% would disagree with the figure they propose.

The bottom line is we need to take notice of our own property taxes just as closely as we do our federal income tax filings. In this current housing tax where a 10% reduction in home value could equal $500 in tax savings it is up to each taxpayer to assess their own assessment.

The taxes http://www.LowTaxRate.com is a free resource for taxpayers to better understand their property tax, tax assessments and offers help to dispute inflated tax assessments. It is important that we all make certain we are paying our fair share of tax.

Ryan Richmond

LowTaxRate.com

Bet you didn’t know this

With these economic times everyone is trying to save everywhere they can. Whether is at the grocery store or at the gas pump or their utility bills or what ever it may be, the focus is to save.

This article will look at two areas of savings; your income taxes and at places you already shop or spend money.

Income taxes

Something you probably you didn’t know about the taxes you pay from you check at work. Every year about 5 months worth of your income goes to the government in taxes. Can you believe that! 5 months of your hard earned money goes out in taxes! Crazy, right? Well not for the government but probably for you. Another thing about taxes is that you don’t have any control over when you pay them. When you get paid, the taxes are already taken. So the order goes this way: You pay taxes, then you get paid, then you pay your bills and hopefully you get to pay yourself. How does that sound? You do all of that hard work for 80+ weeks and you pay the government first and YOU last. Bet you never looked at it that way. Well coming up you will see a wonderful way to combat this travesty!

Business Ownership

Business ownership is one of the best ways the average person and combat the Tax Attack. When you become a part time business owner along with your full time job, you can change your W-4 reflect you have a business, thus pay less in taxes or none at all. Bet you didn’t know that either. Yes by being a business owner the government recognizes you as a different entity. So this is one way to save money and get paid more from your checks from at work.

The next thing about being a business owner is that you get to PAY YOUR SELF FIRST, pay bills and then pay taxes LAST! Finally, even though your business is part time, you get to pay yourself first. That’s right you, the most important person in the world to you.

Save! Save! Save!

One great way to save to be part of a savings program. A program that allows you to pay a membership fee and have access to savings that everyone else does not. This type of program will give you access to a number of places and areas to save because these retailers are part of an affiliate program that allows them to provide savings to those that own a membership. The retailer in turn get more customers, brand recognition and in return can provide even more savings. This is just one example

So we’ve talked about tax savings through business ownership and saving at places you already shop through a savings membership program. This should be a great start for you on the road to keeping more money in your pocket.

That’s the whole point.

Here is a link to view free information on how to do all three aspects that were mentioned in the article.

Save money on your taxes, become a business owner and save on shopping.

http://www.marlonhurd.wordpress.com

It will only take 5 minutes of you time. Is saving on your taxes at work, paying yourself first and saving up to $200 per month worth 5 minutes? I think so.

A great way to stimulate the economic rise of this country is by giving out federal tax rebate checks. All you need to do is pay for your income tax for the year 2007. You basically do not have to do anything to qualify for this rebate, just pay and then the IRS will do the rest.

The communication between the IRS and the taxpayer will be done through mail. So do not fall for scams that ask you to give out your personal information. They are not from the IRS. People from IRS cannot remind the people enough that they will be sending a notice; nobody from the IRS will call. They will send two notices that state about the federal tax rebate checks and the principle behind that and the second notice will tell the taxpayer that they are qualified to receive the check and the amount of money they get and the timetable of when they will be getting the rebate.

A lot of people are so angry with the government for giving the people such measly amount of money when there is a financial crisis going on. The crisis if felt everywhere. Banks, who in the past gave out credits like money was just tissue paper, are now cutting off their credit loans and are restricting their requirement so that they would be assured that the person will have the ability to pay back his credits. With all these going on, it is helpful of the IRS to give federal tax rebate checks to their taxpayers. The only problem is, some people think the amounts are too low and that these amounts would not change things very much.

But beggars cannot really be choosers. One should just accept their federal tax rebate checks and get on with their lives. Just think of it as bonus money for a job well done. In the past, we have not been receiving checks from the government, so we should just be grateful that this year is different. And how can one expect the government to give out more money than they can afford. The idea here is to stimulate the economy to get our country out of this crisis, not to push the government to bankruptcy.

Let us just receive the federal tax rebate checks with an open mind and hope that in the years to come, IRS would not need to rebate us with anything to stimulate us in getting our economy going.

Robert Grazian is an accomplished niche website developer and author.

To learn more about tax rebates visit Financial Freedom And You for current articles and discussions.

October 15, 2008, is the deadline to file your 2007 IRS tax return if you applied for and received an extension last April. It is also the deadline to claim your economic stimulus check.

If you are a retiree or disabled veteran and you normally don’t file a tax return, you must file a tax return to qualify for your $300 check (you also receive $300 for each qualifying child you have).

If you are a retiree or disabled vet, you must have at least $3,000 in qualifying income from earned income, nontaxable combat pay or certain benefits from Social Security, Veterans Affairs and Railroad Retirement.

Qualifying income from Social Security includes retirement, disability and/or survivor benefits. Qualifying income from Veterans Affairs includes disability compensation and/or pension and/or survivor benefits. Dependents or those eligible to be dependents on someone else’s tax return are not eligible for an economic stimulus payment.

To qualify for your payment you also must have a valid Social Security Number unless your spouse is a member of the military.
The IRS can’t give out any economic stimulus payments after Dec. 31, 2008. However, if you are eligible for an economic stimulus payment, you can claim a credit in 2009 by filing a 2008 income tax return.

If you have filed your 2007 tax return but who have not received your economic stimulus payment, you can check on the status of your check by going to the IRS.gov Web site and clicking on the link entitled: “Where Is My Economic Stimulus Payment.”

Remember, you must file your tax return by October 15. And in this economy, couldn’t you use an extra few hundred dollars?

Discover if you qualify to have your taxes e-filed for FREE. Visit http://efile.123easytaxfiling.com

It is a safe, secure and easy way to file many of your Federal tax forms, as well as many state returns.

Income tax frauds are generally categorized into two types — personal income tax fraud and business income tax fraud. In the case of business income tax frauds, the owner of the company may use his corporate credit card for expenses related to his family; like paying for family vacations; and then reporting these expenses as valid business related expenses and deducting the same from taxable income.

In case of personal income tax frauds a person, although living in a place in the US does not pay the city’s resident personal income tax as he/she may own a summer house at a different place that is used as his/hers tax filing address. Also there are some cases where someone has filed a tax return by using the social security number of some other individual. Such serious fraudulent cases have to be reported to the IRS with the help of the guidelines given below:

To report an individual or a company not complying with the tax laws, you can download Form 3949-A from the IRS website. The form has to be filled and sent by US mail service to the IRS. On the other hand, you can also report an income tax fraud by writing a letter to the IRS. However, when you write a letter, you need to be very precise with the information you furnish. You would be required to give the following information in the letter:

• Name and address of the person committing income tax fraud

• The social security number of the person

• A brief description of the fraudulent activity or violation

• An estimate of the amount involved in the tax fraud

• Your name, address and telephone number.

This information is usually kept confidential and is not revealed at any time whatsoever.

About Author: Pauline Go is an online leading expert in finance industry. She also offers top quality finance tips like:
Best Way To Invest In Sector Funds, What Is Taxable Interest? and Federal Credit Union & Financial Services

Like many American’s last month I went and visited my accountant to prepare and file a federal tax return. Many thoughts raced through my mind on how to spend my newly found fortune, new clothes, a well-deserved night out or possibly pay down the credit card. Although all of them sounded appealing, like many of us I used my tax return to pay my tax mistakes tax bill. This is a common way for many; use our tax return to pay our property tax.

This vicious cycle has been played out every spring since I became a homeowner. It was not until last year tax I thought about all of the tax and preparation that went in to my federal taxes only to glance at my property tax bill and write a check without question or a second thought.

After utilizing many available tax deductions and credits many may find that the amount of federal taxes paid is less than the amount of their annual property tax.

When we examine our local property tax the same concepts apply as federal tax, however we rarely take notice. For example most municipalities allow for tax deductions and credits to offset the amount of property tax due. Many states give you a lower tax rate just for owning the home as your primary residence, being a veteran, or if you are over 65 years of age to name a few.

While these credits and deductions are important to take note of the more important issue is what your local government has valued your home at. This can often make the most impact to taxpayers. Known as your assessed value, this is what is used to multiply your local tax rates in order to arrive at the amount of property tax you will owe for the year. This can be one of the most overlooked aspects to homeowners, especially as of late in this current housing meltdown.

It is first important to find what your local assessor has for a property description of your home as mistakes often occur. Verify the square footage, the number of bedrooms and other data on your property record card is correct. Most assessors never look at your home, rather employ mass appraisal systems and rely on public record information to assess your homes value.

Why are we entrusting our local taxing authority to tell us our homes value? According to the Tax Foundation over 60% of homes in America are over assessed. More than half of us are paying too much property tax. All areas do allow taxpayers to dispute their annual assessment while less than 5% take corrective action. Maybe the IRS should take note of our local taxing authorities and make certain assumptions about everyone’s annual income, I would imagine a few more than 5% would disagree with the figure they propose.

The bottom line is we need to take notice of our own property taxes just as closely as we do our federal income tax filings. In this current housing market where a 10% reduction in home value could equal $500 in tax savings it is up to each taxpayer to assess their own assessment.

The website http://www.LowTaxRate.com is a free resource for taxpayers to better understand their property tax, tax assessments and offers help to dispute inflated tax assessments. It is important that we all make certain we are paying our fair share of tax.

Ryan Richmond

LowTaxRate.com

These are some of the most important and best charity car donation tips you’ll need to consider before donating your car, truck, van or other any other vehicle. You can donate cars, trucks, boats, airplanes, ATV’s, even old motor homes and many other types of vehicles and get a good tax deduction.

1. First it’s important to know that the laws were changed in 2004 limiting the donor’s used car donation tax deduction to the amount the selected charity ends up selling the car for.

2. You want to find out if the charity is rightly eligible to be the receiver of tax deductible contributions so make sure that you ask for the organization’s Internal Revenue Service’s “Letter of Determination.” This will verify their status.

3. Make sure to get a good well-documented receipt from the charitable organization for your vehicle or car donation.

4. In order not to send up any red flags on your income tax return know that the IRS looks carefully at non-cash donations so make sure to clearly document the correct car or vehicle value and keep accurate detailed records.

5. If your used vehicle is worth $500 or even more, then complete the newest Internal Revenue Service tax deduction form, the number may change form time to time, fill out the proper portion and attach it to your income tax return. You must also include a written acknowledgement from the charity.

If your charitable organization sells your donated car, then they must provide you with the sales price within 30 days with a certification the automobile, truck, van or other vehicle was sold at between parties not related to each other. The donor’s tax deductions must be limited to the total the charity sold the car or vehicle for. If they don’t sell the car, they must provide you, the donor, with a receipt within approximately thirty days of the sale, whenever that occurs. They must also certify to the donor how it intends to use or upgrade/repair the car and state in writing that they will not sell the vehicle or transfer it to any other party.

6. If your car is valued at $5,000 or more you’ll need to get an independent appraisal and complete the appropriate part of the Internal Revenue Service form.

7. For cars or vehicles that are worth under $5,000, use either Kelley Blue Book or a guide from NADA to determine the current market value. Use the right and correct figure for the date, mileage, and car’s condition. Don’t just pick the highest figure for your vehicle year and model and not note other important factors. The IRS will look down on this.

8. Take several close-up pictures of the vehicle inside and out.

9. Save all your receipts for any upgrades including any new tires to document and verify the car or vehicle’s value.

10. It’s important to know that it’s not the charity or charitable organization, who is obligated to come up with the correct value and you’ll have to pay any penalties if the IRS audits or challenges you and finds your figures are unfounded.

Finally be aware that some charities use a donated car or vehicle for transportation or for hauling and they benefit directly from the donation. But in most cases the vehicles or cars are sold by the charity, dealer or car donation center to help raise funds for the charitable organization. When this happens, if it’s the dealer, the charity may get only a flat fee and may be as little as $50 for your used car. So check with the charity on how they intend to handle the donation if this is important to you.

These are some of the best charity car donation tips you can put to use immediately if you’re considering donating a car, truck or other vehicle to a charitable car donation program.

For more tips on choosing the best charity car donation, car donation program, used car donation or charitable car donation online and offline go to http://www.Car-Donation-Info.com for charity and tax deduction tips, help, facts, reviews, including information on all types of car donation

When I recently saw the President of the Pay Day Lender’s Association on TV the other day lecturing the viewing audience to “Never borrow more than you can repay in a short period,” I got sick to my stomach. I knew he was smelling blood!

He was clearly reacting to the increased desperation of the middle class American worker, falling further behind because of stagnant wages, rapidly rising mortage, gasoline and health care costs.

If you don’t take action to protect yourself and your family, now; from this increasingly predatory economy we live in; you will go right into bankruptcy, foreclosure or both, along with millions of your fellow middle class Americans.

Most of you are letting the government take 30-50% of your hard earned income in taxes every day, while tax the corporations and the wealthy ever more unconscionable and unfair taxbreaks.

Exxon/Mobile makes $9 Billion in profits in 1 quarter and ½ million middle class families will go bankrupt this taxes because they do not have $300/mo more income, which according to a Harvard researcher, Elizabeth Warren, is all that is needed for them to avoid bankruptcy!

There is no way the average person’s wages are going to keep pace with the spiraling cost of living, so the head of the Pay Day Lender’s Association wants to lend a helping hand, at 240% annual taxes of course.

Fortunately, there is another way. You can take back 10-25% of your hard earned pay check that you routinely let the government confiscate.

You can start a home based business and take advantage of the same tax system the corporations and the wealthy use.

You didn’t know there were two tax systems in this country?

Their tax system allows them to pay little to no income taxes, averaging around only 4-5%. You know too well what your tax system takes from you.

How would you like to be able to slash your income taxes and increase your take home pay by 10-25%, every pay day, starting now?

You must have or start a home based business. It must be run with the intent of making a profit, worked at least 20 hours per week and you must not co-mingle personal and business funds.

Once you have a home based business, you can learn how to redirect the money you are presently spending on supporting your lifestyle into expenses necessary to run your business.

Think about a simple trip to the mall on Saturday with your family to shop for a pair of shoes for your son. Tax deductible? A business expense? Clearly not.

However, what if you were to pick up a box of blank CD’s or a new ink cartridge for your business computer? Bingo! That trip has become a business trip! You can now write off the mileage to and from the mall, irrespective of the fact that you bought your son his shoes.

Come to think of it, how would you like tomake the purchase of your son’s new shoes a business deduction too? Impossible? Nope. Instead of giving him an allowance, give him a pay check! That’s right, put him and other family members on the payroll.

The IRS says that if the job is legit, the wages suitable for the work done and an actual pay check is cut, there is no problem with hiring family. In fact, they have given the green light to having children as young as 7 years of age, employed in family businesses.

All of these new found write offs add up to huge tax deductions, which means more take home pay.

An Extra Pay Check of $500-$1,000 every month for your family can make the difference between financial survival and financial disaster.

The key is to have a qualified home based business.

Copyright, 2007, Bill Young. Bill is a Personal Financial Consultant. He shows people How to Quit the Rat Race in 5 Years! He did it himself, in real estate. However, because of the current state of the real estate market, now favors home based businesses as the springboard out of the Rat Race. Click here for more info: http://www.linkbrander.com/go/48681 Call Bill for a free, no obligation 30 min consultation on your personal financial situation and how you can overcome the problems and become financially free in 5 years! 877-291-3642

IRA investing in real estate is becoming increasingly popular. There is no way to cover all of tax ins and outs of IRA real estate investing in a single article of this length, but I can tax least give you some of the highlights.

If you’ve heard or read the success stories, you may be “chomping at the bit”, but IRA investing in real estate is not without risks. So, you need to get some education first. Experienced investors have programs that can help. Of course, advice like that is not free, but if it helps you find good deals and avoid the common mistakes, then it is well worth the cost.

In order to begin IRA real estate investing, you need a self directed account and an account custodian. You should choose someone reliable, with years of experience. They can’t suggest specific deals or anything like that, but they can provide you with some of the education that you need. For example, the better custodians provide education about prohibited transactions, prohibited investment types and the rules about self-dealing. If you make a mistake, your account could lose its tax free status. Once you have selected an account custodian, you need to decide how to fund the account. If you currently have a traditional account, you should be able to “roll it over”, without penalty, although the bank or brokerage that you are currently using may charge a fee.

This is the best time to consider IRA investing in real estate, because you may have a large amount of un-invested cash. If you can find a few good deals, you can make big profits quickly. Or, if you want a consistent flow of income into the account, you may want to consider a rental property. There are many options to choose from when it comes to IRA real estate investing. You can buy houses, apartment buildings, raw land, mobile homes, and office buildings or simply finance other people’s homes. But, there are some things that you must avoid.

You cannot sell your own home to your account. You cannot use the account to buy property that you plan to live in at some point in the future. Your sons and daughters cannot rent apartments in buildings that owned by the account. Your parents could not have an office in a building held within the account.

The list of prohibited transactions is relative long, but not complicated, once you think about it. IRA investing in real estate or any other vehicle is designed to benefit your future, not your present day wealth. So, if you benefit from an investment, either directly or indirectly, your account could lose its tax free status.

One of the primary taxes that experienced investors suggest IRA real estate investing is because of the tax advantages. If you sell a property for a profit, there are no capital gains taxes. If the account makes rental income from a property that was purchased with cash from the account, there is no income tax.

So, experienced investors sometimes save as much as 25% by using their retirement accounts. That’s only a few of the advantages of IRA investing in real estate. It’s probably just enough to make you curious.

W. Conley is an advocate of IRA investing in Real Estate as a means of diversifying your portfolio, while maximizing returns. He has successfully invested in Real Estate and has seen fantastic returns on his investments, all of which was done using a proven system. You can read more about the benefits of IRA investing by going to http://smart-ira-investing.com