Write off assets no longer in use for huge tax benefit!
Partial Asset Disposition provides a huge tax benefit by writing off assets no longer in use. When an owner acquires a property it has a roof, a foundation, walls, floor and so forth and those components make up the cost of the acquired property. We have the ability to write down the cost of the old component, the costs to discard it, and then depreciate the new component when the owner upgrades or updates a portion of their real estate asset, but this also applies if something is abandoned in place.
Common items which occur during Renovations, Remodels and Replacements are HVAC equipment, roofs and electrical. It can also be the result of a structural component of (or an improvement to) a building being retired. A LED retrofit project is a good example and is occurring on a frequent basis lately.
- Renovations/ Remodels/ Replacements
- Abandoned in Place
- Common Items – Roofs, HVAC, Electrical
- Retirement of a structural component of (or improvement to) a building
- LED Retrofit Projects – Energy Savings, Tax Savings, 179D Energy Efficiency Studies
Tax Savings at Sale = Decreases Taxable Personal Property
5 yr. property (35-41%) recaptured at Capital Gains Rate (20%)
Note: Partial Dispositions must be taken in the same year as the renovation. Previously we could do what’s known as a Late Partial Disposition, e.g. apartment owner renovates a unit that had fire damage in 2011. We file for the disposition on his 2013 tax return. This is no longer allowed!
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