The Go Zone tax benefits work for everyone, but if you’re a real estate professional and have high income in 2010, then they are custom-made for you. But, you’ve got to act quickly.
The GO (Gulf Opportunity) Zone was initially set up post Katrina as a way to spur real estate development in the area. Housing was desperately needed and the government wanted to make sure that happened, and fast.
Now, 5 years later, there have been changes and extensions on the original GO Zone tax benefits. The final extension runs out 12/31/10. Here are the bullet points on the final extension:
- The extension only extended tax benefits for certain areas in Mississippi and Louisiana.
- The Go Zone tax benefit is bonus depreciation (more on that below).
- The property must have been completed or under construction by December 31, 2009.
- The property cannot have been rented prior to your purchase and putting it into service.
- It must be put into service by December 31, 2010.
The GO Zone bonus depreciation allows you to take an upfront depreciation for 50% of the depreciable property. This reduces the base in your property. So, in effect, you aren’t getting more depreciation, you are just getting it faster (much, much faster).
And the bonus depreciation is available for a 5 year carry-back or carryforward, whichever is applicable for you.
If you’re a real estate professional, this carry-back could mean you get a refund from past year’s tax returns. Please search past USTaxAid blog posts for the definition on what it takes to qualify as a real estate professional.
The key is that you have to act now to take advantage of the credits! I work closely with Matt Bowles at MaverickInvestorGroup. Contact him for more information on these credits if it sounds like a good fit for you.
Tags: diane kennedy • Diane Kennedy CPA • Gulf Opportunity Zone • Matt Bowles • Maverick Investor Group • tax extensions • ustaxaid • UStaxaid.com