Responding to concerns voiced by NAHB members and other groups representing taxpayers, the Treasury Department and the Internal Revenue Service (IRS) have made a taxpayer-friendly change to tax regulations regarding repair and improvement expenses that took effect in 2014.
In general, the new rules require business taxpayers to capitalize, rather than expense or deduct, expenditures used for certain repair or maintenance projects.
Under the first edition of the repair rules, a taxpayer without an applicable financial statement could elect to expense purchases that cost up to $500 on a per-item basis. A separate $5,000 safe harbor was established for taxpayers with applicable financial statements. These safe harbors were created as a taxpayer simplification measure to reduce administrative costs.
Many organizations, including NAHB, provided examples to the IRS indicating that the $500 limit for taxpayers without financial statements was too low given typical costs of computers, machinery or equipment and parts.
In response to these concerns, Treasury and IRS have increased the $500 limit to a $2,500 per item safe harbor for costs incurred after Jan.1, 2016. This is a favorable change for the construction and real estate sectors, which possess a larger concentration of small businesses.
Here’s an example: Suppose a business taxpayer makes a significant repair to the HVAC system of a small apartment building that involves the purchase of a part that costs $2,000.
Assuming that the repair would otherwise require capitalization because the repair is significant and critical to the operation of the system, under the new increase in the safe harbor amount ($2,500), that cost may now be deducted immediately by the taxpayer without financial statements.
Be sure to consult your tax professional regarding this change and the new repair and maintenance rules in general.
The Neighborhood Initiative Program (NIP) is designed to stabilize property values and prevent future foreclosures for existing property owners in strategically targeted areas through the removal of blighted structures.
NIP will assist communities by acting as a catalyst to stimulate redevelopment and revitalization in areas suffering from blight and decline, stabilizing values and assisting in the the preservation of existing neighborhoods. NIP is a joint venture of the South Carolina State Housing Finance and Development Authority and the SC Housing Corp. (SCHC), a not-for-profit corporation. NIP is made possible by the U.S. Department of the Treasury.
113 Mt Eustis ST
The Neighborhood Initiative Program aims to acquire and restore the property through grading and seeding.
The City of Greenville, along with seven partnering non-profit organizations, was awarded $2,146,767 in NIP funding. The seven partnering non-profit organizations will acquire properties containing vacant and blighted structures, demolish all structures on the property and restore the property through grading and seeding. Properties must be located in one of the City of Greenville’s Special Emphasis Neighborhoods. The maximum amount of funding allowed for each property is $35,000, including all acquisition, demolition and restoration costs. Properties acquired through this program will be redeveloped for affordable and workforce housing opportunities. All funds must be spent by June 30, 2017.
For more information or if you are interested in selling your property, please contact Michael Williamson, Community Development Division, at 864-467-4570.
The U.S. Treasury Department announced yesterday that it will delay implementation of the employer mandate to provide health insurance to employees until 2015.
The Affordable Care Act requires that companies that employ 50 or more employees provide health insurance, or pay a fine. The mandate was set to begin January 1, 2014.
To read the complete announcement at treasury.gov, click here.