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- As the seller and eventual lessor, you essentially maintain control of the property, which prevents operational disruptions from occurring.
- Assuming the current property is financed with debt, this long-term debt can be eliminated from the balance sheet under certain lease arrangements.
- From a tax perspective, you gain an additional annual “write-off” for the portion of rent related to the land (as land is not depreciated).
- The loss of the real estate’s appreciation value over the course of a lengthy lease term.
- Significant income tax impact that comes in to play when a property’s sale price significantly exceeds the property’s “book value.” This typically occurs when you are selling a property that has been owned for a long period of time prior to the sale.
- A decrease in your Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as your depreciation expense on the property is replaced by the rent expense.
We’re down to the wire. Just another week to go before April 15 – Tax Day. If you’re still working on your taxes, and are looking for an opportunity to make a donation on your state tax return – consider supporting the Ohio History Connection’s efforts. Read on to find out how you can support history preservation efforts throughout Ohio and even in your community.
Guest blog post by Emmy Beach of the Ohio History Connection:
The Ohio History Connection has developed an innovative way to help Ohioans support history preservation efforts across the state and in their communities. The best part: it can all happen in a matter of seconds.
It’s called the History Fund. The History Fund creates grants to help support local history and preservation-related projects in communities throughout Ohio. The History Fund is supported by Ohio taxpayers that select “Ohio Historical Society” as a donation fund on their state tax returns (the state tax form hasn’t caught up with their recent name change yet.).The entire process takes just seconds to complete.
The impact of donations can last for generations. Over the last three years, the History Fund has received nearly $300,000 in voluntary funding from Ohio taxpayers. This allowed the Ohio History Connection to green light more than 30 historic preservation projects that wouldn’t have received funding otherwise. History organizations have been able to accomplish important projects that have been on their wish-lists for years.
The History Fund impacts organizations big and small. This year, Cleveland’s Rock and Roll Hall of Fame received a grant to preserve the work of Plain Dealer rock and roll reporter Jane Scott; in Athens, the Dairy Barn Arts Center received a grant to repair the structure of their community’s popular arts venue. In each case, the generosity of Ohioans helped preserve a chapter of Ohio’s more than 200-year-old story.
“The History Fund helps us share and preserve Ohio’s story by supporting local projects and programs in communities throughout the state,” said Burt Logan, executive director and CEO for the Ohio History Connection. “The work of local history organizations is helping to strengthen our heritage and ensure Ohio’s story is told for years to come.”
The History Fund needs to receive at least $150,000 this coming tax season to stay on Ohio’s tax forms for the next two years.
The grant program received $165,000 last year, with average donations of around $10.
“Small donations can make a big difference,” said Andy Verhoff, History Fund grants manager. “If every donor who gave last year gives just $10 from their refund, we’ll cross over the $150,000 threshold easily and have even more to grant in the future.”
The tax check-off process is a win-win for taxpayers and the state. History and preservation organizations across Ohio are revitalizing their communities, one project at a time.
You can see historic Ohioans Annie Oakley and the Wright Brothers promote the History Fund in public service announcements videos below.
Are you looking for a plan to increase your business’s cash flow? If you own business property, you may be able to benefit by entering into a sale-leaseback transaction. But while there several great benefits to this type of agreement, there are also some significant drawbacks. So, before you draw up the paperwork, schedule a time to meet with your financial advisor to find out if the benefit outweighs the risk.
Advantages Of A Sale-Leaseback Transaction
A sale-leaseback transaction occurs when you, the real estate owner and occupier, sell your property to a third party on the condition that they agree to lease the property to you. Entering into this type of arrangement has several benefits, including increasing your business’ cash flow while freeing your business up to allocate the capital to other areas of your business. Additional benefits include:
Drawbacks Of A Sale-Leaseback Transaction
Perhaps the most significant disadvantage of entering into this type of agreement is that you stand to lose the flexibility that comes with owning the property outright since these transactions usually are for longer terms than a typical property lease (15 or more years). The typical sale-leaseback transaction takes the form of a “triple net lease,” which usually states that you, as the tenant, will be responsible for the net real estate taxes, net building insurance and net common area maintenance. Other disadvantages include:
The financial benefits of sale-leasebacks must be balanced with your unique strategic and operating considerations. A financial advisor and business consultant can help identify whether this option is right for you and your business. Email Rea & Associates to learn more about sale-leaseback transactions and other strategic business decisions. By Ben Antonelli, CPA (Dublin office)