Vol17-10 BuyRentOffice

Rent/Buy Office Analyzer

Patent Pending

Comments and suggestions: Send e-mail to contactus@taxreductionletter.com

Step 1: Replace sample data with your data and tab to next entry. Analyzer updates after each entry.

Step 2: View your results! Note that you can see the results in three views below.

Purchase of office

How to Enter Data

1. You earned an annual compound profit of

Price you will pay for the office?

Enter amt., hit tab

2. The profit in no. 1 is

better or worse (red)

Down payment?

than your safe investment return.

Mortgage (calculated)

3. Your earned an after-tax annual compound return of

Mortgage period in years?

Enter yrs., hit tab

4. You walked away with after-tax cash of

Mortgage interest rate?

Monthly payment (calculated)

Result View 1:

Points (percent)?

Enter %, hit tab

Based on the assumptions and facts you entered into this formula,

Points (calculated dollar amount)

your investment in this office produces an annual compound

Other mortgage closing costs

profit of

compared with your current safe

Total costs to obtain mortgage

investment return of

Closing costs to obtain title (transfer/stamp taxes, survey, etc)

Result View 2

On an after-tax basis, this office investment produces

Existing Rent

compared with your current

after-tax

Your current monthly rent?

investment return.

Expected annual increase in rent as a percentage (your best guess)?

Result View 3

Current monthly utilities?

Over the life of this investment and adjusted to today's dollars, you

Expected annual increase in utilities

invest

and

years later,

as a percentage?

you walk away with

in after-tax cash.

Income Taxes

Federal tax rate on your business income (income and self-employment)?

State tax rate on ordinary income?

Federal tax rate on unrecaptured section 1250 gain

Federal tax rate on capital gains?

State tax rate on capital gains?

Investment Return

Annual percentage return you earn on a safe investment?

Tax rate (combined state and federal) that applies to this safe investment?

After-tax safe return (calculated)

Appreciation in office Value

Years you use this office as your office?

Anticipated average annual appreciation in office value?

Selling price of office (calculated)

Real estate commissions and closing costs on the sale of this office as a percentage of selling price?

Office Ownership Costs

Real estate taxes per year?

Annual increase in real estate taxes?

Repairs and maintenance per year?

Annual increase in repairs and maintenance?

Property insurance

Annual increase in insurance?

Utilities per year?

Annual increase in utilities?

Condo fees?

Annual increase in condo fees?

Other expenses?

Annual increase in other expenses?

Allocation of Purchase Price to land and building

Purchase price of property

Closing costs to perfect title

Total cost (basis) of property

Percent to land

Basis of land

Basis of building

To keep this worksheet straightforward, cost segregation and potential personal property depreciation are not considered.

Calculated amounts to produce the results above.

Year

Mortgage interest

Real Estate Taxes

Repairs & Maintenance

Property insurance

Utilities on office

Office condo fees

Other

Tax-deductible cash outflows

Depreciation (Building) 39 yrs

Mortgage points/costs amortization

Tax-deductible expenses

Tax rate on business income

Net cash benefit from deductions

Rent no longer paid

Utilities on rental no longer paid

Total rent and utilities not paid

Tax rate on business income

Lost tax benefit of renting

Net cash benefit by not renting

Cash outflows (inflows)

Mortgage principal paid

Down payment

N / A

Costs to obtain mortgage

N / A

Costs to obtain title

N / A

Tax-deductible cash outflows

Net cash benefit from deductions

Net cash benefit by not renting.

Cash outflow (inflow)

Present values of cash outflows

Cash outflow only

Applicable cash outflow

Present value of applicable outflow

Cumulative present value

Future value of cash outflows

Cash inflow only

Applicable cash inflow

Future value of applicable inflow

Cumulative future value

Add net cash from sale of office

Less taxes on sale of office

Net cumulative future value

Cash proceeds from sale of office

Selling price of office

Selling expenses and closing

Net sales proceeds

Payoff mortgage

Net cash from sale

Adjusted basis

Purchase price

Cost to obtain title

Less depreciation

Adjusted basis day of sale

Gain or loss or sale

Net sales proceeds

Purchase price (basis)

Gain (loss)

Taxes on sale

Unrecaptered 1250 gain

Tax Rate on uncaptered 1250 gain

Federal tax on 1250 gain

This is the tax you pay on the amount of the gain attributable to straight-line depreciation.

Capital gain

Federal tax on capital gain

State tax on capital gain

Income taxes on sale of office

Mortgage Amortization

Principal

Interest

Years

Payment

Year

Beg/Prin

End/Prin

Pmts

Int.

Prin/Pay

Total