 |
|
 What is Chattel?
|
|
| Chattel is personal property utilized in rental property that is deductable from your federal income taxes over five to 15 years. Rental properties are full of items the investor owns but is for the exclusive use of the renter (Chattel). Examples of chattel are: appliances that are not permanently attached to real property, flooring, draperies, light fixtures, cabinets, landscaping, and many other items. Chattel is anything owned and tangible, other than real estate (meaning the actual building itself) or the land. |
|
|
|
|
|
Why should I know about Chattel? |
|
| If you own rental real estate, you may be paying more tax than required. Real estate investors are legally entitled to depreciate chattels (personal property) from federal income taxes at an accelerated rate. To the IRS, your rental property is considered a business if you are collecting money for rent. In the course of renting out the structure, renters are also “renting” the personal property which supports the unit and, in the normal course of living, incurs wear and tear on this personal property. In order to allow the investor to retain some residual value on his/her chattel (personal property), the IRS provides a depreciation allowance over the course of five to 15 years, depending on the item being depreciated. |
|
|
|
|
|
Why should I use Spectrum Chattel Services? |
|
| We are experienced professionals familiar with what is legally considered chattel (and therefore depreciable) and what is not. We will save you a tremendous amount of time and money as it would take the average person countless hours of research to gain insight and familiarity with IRS regulations. Once you have finally figured out these rules and regulations, you then have to perform the chattel appraisal and accurately estimate the cost of all the chattels. Simply put, your time is worth considerably more. |
|
|
|
|
|
How much will I save on my taxes? |
|
| Your tax savings will depend on several factors: the value of the chattel in the property, the condition of the property, and your tax bracket. Most single family homes have approximately $15,000 to $40,000 in depreciable chattel and land improvements. This is why we offer such a solid guarantee. |
|
|
|
|
|
How many years can I depreciate the Chattel off my taxes? |
|
| Although the average life span for depreciating chattel is 5 years, there is some personal property that has a longer life span. So, if you keep your rental property for 5 years, you would be able to depreciate the chattel off your taxes every year for 5 years. |
|
|
|
|
|
What is the difference between depreciating the property and expensing the property? |
|
| Depreciating chattel allows you to lower your capital gains tax over a five-year period. However, if you expense your chattel, you only get a one time write-off for the year in which you purchased the item. So, during years two through five, you are potentially losing out on lowering your taxes. |
|
|
|
|
|
What if I am selling my property within 1 year? |
|
| We recommend that you Do Not have a chattel appraisal performed as you will not benefit from it. |
|
|
|
|
|
Do you accept referrals? |
|
Absolutely. In fact, we will pay you $75 for every chattel appraisal we perform based on your referral.
If you know any real estate investors or property managers that may benefit from our program, simply give them our contact information and be sure to tell them to identify you. If we are privileged enough to be selected by them to perform a chattel appraisal, you will be rewarded $75 for each property we appraise. You may want to inform them of our multi-property discount program too.
Note: If we perform more than 10 chattel appraisals based on your referrals, we will increase your payment to $100 for each referral. This, in itself, could provide you an extra $1,000 per month. |
|
|
|
|
|
Is there a recapture tax if I depreciate my Chattel and land improvements? |
|
| Yes there is. However, if you depreciate your chattel and land improvements for more than 1 year, you still come out ahead. |
|
|
|
