Do you own a property? Here are 6 ways that help you increase your cash flow

In the current economic condition that is prevailing cash is the king and taxpayers who are property owners and tenants who have made improvements in recent times can all receive tax relief from Covid 19 initiatives and as well as from the tax laws that prevailed before the pandemic. This article explains six ways that help in increasing cash flow. Let’s start off with qualified improved property.

Qualified improved property.

The term refers to any improvement that a taxpayer makes to his nonresidential properties interiors. Examples of interiors include enlarging the building, adding an elevator, etc. CARES Act provides a lot of provisions for taxpayers in all industries. Many taxpayers had long-awaited the technical corrections after the passing of the Tax Cuts and Jobs Act. Finally, the corrections were made through the CARES Act.  Taxpayers who placed qualified improved properties into service after 2017 can treat their property as a 15-year property that is eligible for bonus depreciation.

Cost Segregation

Next on the list comes cost segregation. It is a tax strategy that brings in depreciation deductions in the early years of owning real estate. Here the costs are segregated to the right asset class and recovery period. This in turn helps a property have a shorter tax life. This helps in increasing deductions and reducing state and federal income taxes. After the changes in bonus depreciation were enacted in the Tax Cut and Jobs Act, cost segregation became even more valuable. 

Fixed asset study

By applying tax laws to the fixed asset of a company, a fixed asset study can help in reducing federal and state income tax liabilities. One of the most important advantages of conducting a fixed asset study is that if the study reveals that a taxpayer can increase deductions for assets that were previously placed into service that had improper tax lives or methods, the owner of the property can avail immediate tax deductions.

Tangible property regulations

This became effective for the tax year starting on or after January 1, 2014. The tangible property regulation helps in determining if an expenditure is treated as a repair or capital improvement. When the TPR became effective in 2014 a lot of taxpayers filed changes for their accounting methods. 

Deductions for energy-efficient commercial buildings

As per section 179D, a tax deduction of up to $1.80 per square foot is provided in 3 categories namely interior lighting, HVAC system, and building envelopes. This deduction is applicable for newly built or improvements made to leasehold after 2006.

Restoring the net operating loss

The CARES Act included this provision of restoring the losses. Losses that arise in any year that is taxable after 2017 but before 2021 can be restored. As per the act, taxpayers can also decide if they can carry losses forward or backward. Since the TCJA lowered the tax rate from thirty-five to twenty-one percent and the pass-through rate from 39.6% to 29.6% companies can yield benefits by opting to carry the losses back to 2018. 


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