Owners of leasehold, restaurant and retail properties must act soon to enjoy extended depreciation-related breaks.

In January, Congress extended some depreciation-related tax breaks that can benefit owners of leasehold, restaurant and retail properties:

50% bonus depreciation. Congress extended this additional first-year depreciation allowance to qualifying leasehold improvements made in 2013.

Section 179 expensing. Congress revived through 2013 the election to deduct under Sec. 179 (rather than depreciate over a number of years) up to $250,000 of qualified leasehold-improvement, restaurant and retail-improvement property.

The break begins to phase out dollar-for-dollar when total asset acquisitions for the tax year exceed $2 million.

Accelerated depreciation. Congress revived through 2013 the break allowing a shortened recovery period of 15 — rather than 39 — years for qualified leasehold-improvement, restaurant and retail-improvement property.

If you’re anticipating investments in qualified property, you may want to make them this year to take advantage of these depreciation-related breaks while they’re available. It’s currently uncertain whether they’ll be extended to 2014. Unsure if you qualify for these breaks? Contact kayla.payne@hawcpa.com with questions.

Habif, Arogeti & Wynne, LLP

Renting out your vacation home brings tax complications.

If you rent out your vacation home for 15 days or more, you must report the income.  But exactly what expenses you can deduct depends on whether the home is classified as a rental property for tax purposes, based on the amount of personal vs. rental use. Adjusting your personal use — or the number of days you rent it out — might allow the home to be classified in a more beneficial way.

With a rental property, you can deduct rental expenses, including losses, subject to the real estate activity rules. You can’t deduct any interest that’s attributable to your personal use of the home, but you can take the personal portion of property tax as an itemized deduction.

With a nonrental property, you can deduct rental expenses only to the extent of your rental income. Any excess can be carried forward to offset the rental income in future years. You also can take an itemized deduction for the personal portion of both mortgage interest and property taxes.

We can help you determine how your vacation home rental will affect your tax bill — and whether there are steps you can take to reduce the impact. Please contact kayla.payne@hawcpa.com if you have questions about your rental property.

Habif, Arogeti & Wynne, LLP

Tax Consequences to consider before putting your home on the market

 

When you sell your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain if you meet certain tests.

Gain that qualifies for exclusion also is excluded from the new 3.8% Medicare contribution tax.

Losses on the sale of your home aren’t deductible. But if part of it is rented or used exclusively for your business, the loss attributable to that portion is deductible, subject to various limitations.

Because a second home is ineligible for the gain exclusion, consider converting it to rental use before selling. It can be considered a business asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss, but only to the extent attributable to a decline in value after the conversion.

If you’re thinking about putting your home on the market, please contact us at kayla.payne@hawcpa.com to learn more about the potential tax consequences of a sale.

Habif, Arogeti & Wynne, LLP Combines with JRZ, LLC

Earlier this week, Habif, Arogeti & Wynne, LLP (HA&W)and JRZ, LLC signed an agreement to combine, creating the fastest-growing commercial real estate tax practice in Atlanta.

HA&W’s CEO & Managing Partner, Richard Kopelman, said: “With the inking of this deal, there are immediate synergies, as this combination bolsters our already market-leading real estate group.”

Jim Ziegelbauer, head of JRZ, LLC, is a well known and respected tax professional in Atlanta’s real estate industry. Jim’s firm specializes in providing tax and consulting services to closely-held commercial real estate owners, operators and investors.

Click the link below to read the full article!

http://www.prweb.com/releases/2013/5/prweb10695483.htm