One of the biggest tax advantages of owning a rental property is the depreciation you can take on the amount you paid for the property. Of course, the IRS understands that land does not wear out. So, only the portion of the purchase price related to the building and the contents is subject to the allowance for depreciation. This makes determining the building/land split a very important decision. Take for instance a $200,000 home. If you can justify 10% of the value is for land and 90% is for building, you can take a depreciation deduction of at least $6,545 per year. Compare that to the same $200,000 home with a land value of 30% and a building value of 70%. In this case, the depreciation deduction is only going to be $4,580 per year. The result is almost a $2,000 difference in tax deduction per year.
But how do you determine the value of the land and the building? There are a few options available. The first option is to check the county real estate tax bill for the property. Frequently, county assessors print the estimated land value and improvements value on the actual tax bill. These assessed values may be lower than the price of the property at the time of purchase. So, if you use this method, you should take the relative values of the land and the improvements to arrive at the ratio of land value to total value. Then, you can apply that ratio to your purchase price to determine the land value for your tax return.
A second option you can use is comparable sales values based on appraisals for similar properties in the area. You can speak to a real estate agent to find out what appraisers are using for land values in the area.
A third option to determine the split between building and land is to use an industry standard for the area. This standard could be anywhere from 80% building and 20% land in some areas, to 30% building and 70% land in other areas where land is at a premium - many areas in California and Hawaii come to mind. Although it is rare for the IRS to challenge an industry-standard split, in the event of an IRS challenge, you may be forced to go back to one of the first two methods.
We find industry standard splits to be the most common method of allocating the purchase price between land and building simply because they are so easy to apply. With recent escalations in the prices of real estate throughout the country, however, this may be an area the IRS chooses to examine. We recommend that the industry standard be viewed as a last resort and encourage everyone to at least explore the other options simply because they provide good support for the IRS and they may even provide you with a more advantageous allocation.
Be sure to review these options with your tax preparer before they begin preparing your tax return.
Building And Land Technology
Consider it micro marketing. This is the world of Twitter. You have no more than 140 characters (including spaces) to tell your followers (think friends) anything you want. Some users will respond with inane bits of uselessness that are designed to bring a smile while others will simply micro-blog about their day.
However, for the savvy marketer Twitter offers an impressive opportunity. Consider this, you want to tell new customers or inform existing customers about what you have to offer. Many potential clients will only respond to an eye catching opening statement.
Twitter provides a unique way to provide a human touch to your marketing. If you want to direct potential readers to a new blog then provide a link in your Twitter post. Many bloggers and news organizations will Twitter their latest news for quick access by those who have signed up to follow the organization.
It's amazing how much you can actually say in the condensed environment of 140 characters. You'll have to think in headlines. Make the phrase interesting and engaging. Provide the direct link.
If you are working on something specific for your blog you might even consider progress reports or teasers that describe a small window on the topic you will be covering in a future blog post.
Many marketers have found that if you Twitter your blog entries immediately you can actually access potential site visitors faster than using Real Simple Syndication (RSS). You can Twitter by phone (either text or voice) and even set up your blog to automatically post a twitter when you've published.
The primary way to start Twittering is to sign up (it's free). You may find immediate followers or you might seek out a few existing customers. As your Twitter traffic grows you will likely find that you will have more ‘followers' than those you are following. For the marketer that's exactly what you want. It may be difficult for you to follow everyone interested in what you have to offer so be happy to gain a large following and limit those you follow to those you are actually interested in knowing more about.
Twitter is casual, human and consistent. This allows you to keep in touch simply and pointedly. Customers may even welcome multiple short messages as opposed to something the size of an ezine.
When interested parties check on your profile they can see immediately several of your most recent posts. This will provide the impression needed to determine if they want to be followers.
Many websites will have buttons that allow visitors to share that page with others. This is also true with Twitter. You can add a Twitter button on your page and allow other users to send your information through their own micro-posts. It's simple and viral. One visitor who takes your Twitter link and runs with it can turn your information into hot property in a short period of time.
Twitter is a microscopic add on that can have a profound impact on your marketing objectives. It can change the dynamics of site traffic and appeals to the fast paced media saturated culture that seems to live and die by sound bites.
Both Tom Wheelwright & Scott Lindsay are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Tom Wheelwright has sinced written about articles on various topics from Legal Matters, Finances and Management. Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with. Tom Wheelwright's top article generates over 8100 views. to your Favourites.
Scott Lindsay has sinced written about articles on various topics from Payday Loans, Computers and The Internet and Mens Health. in minutes with the at HighPowerSites.com. Start. Scott Lindsay's top article generates over 1830000 views. to your Favourites.
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