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An overlooked way to pass down your home without probate: Tax Strategy Scan

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Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Tax columnists George Jones and Mark Luscombe of Wolters Kluwer put together a list of important changes from this year that will carry over into the next.
March 9

An overlooked way to pass down your home without probate
Clients who want to leave their real estate property to their loved ones may want to set up a life estate to help the beneficiaries avoid costs associated with probate, a Kiplinger article states. Although clients still retain control of, and responsibility for the property, they should consider consulting a professional as the setup could lead to tax repercussions. For example, "giving away assets through a life estate can affect the timing of Medicaid eligibility and trigger gift taxes for your heirs," according to the report.

Cost segregation can provide big tax savings
Companies that have acquired or renovated their building property can save on taxes by doing cost segregation, according to an expert at the Cincinnati Enquirer. Such a study "enables businesses to identify building costs that are properly allocable to tangible personal property rather than real property," say the experts. "This segregation of costs may offer the opportunity to accelerate depreciation deductions, therefore reducing taxes and boosting cash flow in ways that can be very beneficial for businesses."

Who says your clients need tax breaks for retirement saving?
People are more likely to save for retirement if they get tax benefits for building their nest egg, according to Bloomberg. “Tax breaks play a huge part in our retirement system, and the money we spend is rising a lot, especially as the boomers come up toward retirement,” expert says. Clients who take advantage of the tax benefits are "active savers" who have the option to invest their savings in taxable brokerage accounts, he adds.

How debt and taxes can make smart entrepreneurs rich
Entrepreneurs are more likely to succeed if they know how to use "good" debt and take advantage of the applicable tax rules to incur savings, according to an expert at Entrepreneur. "The rich work for good debt, investor debt. ... If you’re a small entrepreneur, understanding the different types of debt is critical," the expert says. "For big business entrepreneurs and professional investors, minimizing taxes is a powerful incentive."

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