GO Zone

Should You Go to the GoZone?

Recently, everyone has been talking about the Go Zone or the Gulf Zone. Our office receives several dozen calls daily on this topic. With the volume of the questions, it is extremely important to clarify the details of one of the greatest tax deductions allowed in U.S. History – bonus depreciation on property purchased in the Go Zone.

(Call, today to see if the Go Zone is right for you: 800.878.4051)

Seeking to provide immediate relief to the damage caused by Hurricanes Katrina, Rita and Wilma, Congress passed the Gulf Opportunity Zone Act (GOZA) of 2005. GOZA created major tax incentives targeting the rebuilding of the Gulf Coast; the geographical areas affected by this tax act include areas affected by Hurricane Katrina. Because the number of counties affected in each state is rather extensive, please contact my office for a detailed list.

The incentives included in the GOZA act include extension of deadline dates to file tax returns and pay taxes, greater deductibility of casualty losses for property loss in the hurricanes, and incentives for employers to continue to employee employees affected by the hurricanes. It also provides for the single largest tax deduction on the acquisition of property in the area considered the Go Zone – bonus depreciation.

Bonus depreciation allows for a single one-time write-off of 50 percent of the depreciable basis of the property. For example, if you purchase a property in Mississippi for $150,000 and the portion applicable to the building or the depreciable portion is $100,000, you could conceivably write off a total of $50,000 in the year of purchase. This additional write-off sounds like a big tax incentive, but behind the scenes there are some major challenges in order to receive this tax incentive.

To take full advantage of the bonus depreciation and the other rental real estate write-offs, you must qualify as a real estate professional or actively participate in the “business of renting” the property.

If you are looking for a major tax write-off, you should consider going to the Go Zone to buy property. The proper tax planning will provide the write-off you need. Closing on a property on or before January 1, 2010 will give you one of the biggest tax write-offs available in years. Go to the Go Zone.

The Go Zone is very complex. We understand it. We invest in it. We will help you understand the Go Zone and see if it is a good investment for you.