Go Zone in the Mississippi Gulf Coast

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Go Zonein theMississippi Gulf Coast!

• Presented by the
• Clara Plummer Group
• RE/MAX by the Gulf

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Katrina brought destruction
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It is time to Rebuild

• 70,000 homes destroyed on the Coast.
• 11,000 Mississippians living in FEMA trailers
  they have to be OUT by June 1st 2008!
• 15,000 short term rental rooms were destroyed!
  Only 5,073 available currently.
• 2nd Quarter we had
• 4.1 MILLION tourists
• 92 Occupancies
• 2.4 BILLION in capital improvements
• The Government can not rebuild the Coast
  alonethus they gave us the Go Zone!
• While most say Real Estate is about Location We
  say it is all about
• TIMING!
• Now is the time!

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Most Exciting Tax Law EVER introduced for Real
Estate Investment

• Definition Gulf Opportunity (GO) Zone
• Special depreciation allowance for qualified
  properties you place in service after August
  27th, 2005.
• The allowance is an additional deduction of 50
  of the propertys depreciable basis (determined
  after any section 179 deduction and before any
  regular depreciation).
• This allowance applies only for the first year
  the property is placed in service.

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What can this mean?

• If you satisfy the Go Zone rules and other tax
  laws like the passive loss rules
• You purchase a condo for 385,000.
• Take 10 out for land cost leaving 346,500.
• You may take the depreciation of 173,250.00
• in addition to other allowable deductions.
• If you are in a 35 tax bracket your net net
  savings of money PAID in taxes would be
  60,637.50.
• That equates to 15.75 of the purchase price or
  all but 4.25 of your down payment with the
  standard 20 down!
• PAY with it or PLAY with it!!
• Its YOUR tax money!

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Backing Into It

• Lets say that you paid 50,000.00 in taxes last
  year AND YOU WANT IT BACK!
• 50,000.00 in taxes means that you had (in a 35
  tax bracket) 142,858.00 in taxable income.
• Divided by 50 (that is the maximum depreciation)
  that would be 285,716.00
• Divided by 90 (you may NOT depreciate LAND) that
  would mean you needed to buy something for
  317,462.22 in property to get ALL your money
  back!

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Go Zone

• Any Net Operating Loss created by the Go Zone
  Depreciation deductions may be carried back 5
  years or forward 20!
• 25 year possible use!
• Location must be Baldwin County, Alabama west
  through Louisiana.
• For our purpose, qualified properties are as
  follows
• Non residential real property
• Residential rental property
• Are you going to write a check April 15th?

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Go Zone

• Must be acquired after August 27th, 2005.
• Only if NO binding written contract for
  acquisition in effect before August 28th, 2005.
• The construction commencement date must be PRIOR
  to December 31st, 2007. A bill to eliminate this
  requirement has passed Congress 75/4 as of April
  4th, 2008 and is going before the Senate now.
• The basis that is eligible for the bonus
  depreciation of the property would be defined as
  the amount of cost incurred PRIOR to the 31st of
  December, 2009.
• Property must be placed in service, in the active
  conduct of your trade or business before 2011 in
  the case of nonresidential real property and
  residential rental property.
• The IRS has interpreted the active trade or
  business requirement to be satisfied when the
  taxpayer meaningfully participates in the
  management or operation of the trade or business
  in which the property is placed in service).

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Meaningful Participation

• The IRS has defined this as follows
• Taxpayer buys a restaurant
• Taxpayer hires a manager to run the restaurant
• Manager does all hiring, firing, budgets, etc.
• Taxpayer meets with manager 4 times a year.

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Go Zone No-Nos

• Property MAY NOT be acquired in a 1031 Tax
  Deferred exchange.
• Property MAY NOT be acquired from any person or
  entity related to you.
• Property MAY NOT be used in connection with any
  private or commercial golf course, country club,
  massage parlor, hot tub facility, suntan facility
  or any store in the principal business of which
  is the sale of alcoholic beverages for
  consumption off premises.
• Property MAY NOT be SELF CONSTRUCTED if commenced
  AFTER December 31st, 2007.
• Self constructed assets are those constructed by
  the taxpayer or by a contractor contract with the
  taxpayer.

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Most Confusing Caveat

• Original Use of Property must begin with you
  after August 27th, 2005.
• EVEN THOUGH YOU MAY QUALIFY FOR THE GO ZONE
  DEDUCTION DESCRIBED HEREIN, THERE ARE OTHER TAX
  LAWS, INCLUDING, BUT NOT LIMITED TO, THE PASSIVE
  LOSS RULES AND THE AT RISK RULES THAT MAY
  SIGNIFICATLY LIMIT YOUR ABIITY TO USE THAT
  DEDUCTION. YOU MUST CONSULT YOUR OWN PERSONAL
  TAX ADVISOR TO DETERMINE WHETHER YOU WILL OBTAIN
  ANY TAX BENEFITS FROM THE GO ZONE DEDUCTION AND
  WE MAKE NO REPRESENTATIONS OR WARRANTY REGARDING
  ANY TAX BENEFITS YOU MAY OBTAIN FROM PURCHASING A
  CONDOMINIUM.

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Active VS Passive Income

• There are several rules with regards to passive
  VS active income for potential benefit from this
  depreciation.
• Active income is your primary income source.
• Passive income is the income you derive from
  things you are not involved in other real
  estate, etc.
• There are ways to switch from Passive to Active
  income that are published by IRS. The most
  common may be the 500 hour rule if you spend 2
  hours a day, 5 days a week, 50 weeks a year on
  similar investment real estate that would satisfy
  this rule.

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Mississippi Go Zone
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Airport Expansion

• 9 Airlines that now serve the airport
• 11 direct flights 5 added last year
• Connectivity includes hubs in Atlanta, Dallas-Ft.
  Worth, Chicago, Houston and Memphis.
• 2,580 seats available daily, outbound, 40 above
  2007 levels.
• Boarding's up 15 in 2007 over 2006
• Continuously working with airlines for more
  frequency and new cities!
• 50 million expansion complete, 15 million
  parking garage will be complete in Nov. 2008, 46
  million air cargo and general aviation ramp
  project will be complete mid 2008, planning for a
  30 million air traffic control tower underway.
• Air Cargo project to Latin America will begin in
  mid-2008

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Market Activity

• Casinos here and coming
• So far, we have 20 Casinos coming to replace the
  12 lost in the Storm.
• Gaming levels FAR exceed pre-storm levels!
• Each Casino has folks that will need housing
  employee and tourists!
• 51 million dollar expansion to airport turned
  into 200 million
• More direct flights all the time
• 68 million dollar expansion to convention center
• 29 million dollar Ohr-OKeefe Museum coming
• 35 million dollar space park planned
• Existing water park in Gulfport
• 24 Golf Courses Open - with more planned
• Latest was FAZIOs new one second ONLY to his
  course in Vegas
• Tourist already LOVE location
• Emeril the famous chef opened his latest in
  Gulfport!
• Gulf Coast of Mississippi nationally known for
  annual festivals, tournaments, and other events!
• Entertainment beyond what most resorts have
  access to!
• Improvement plans in the making and being
  released to the public 24/7!
• Working towards a Tier One resort designation!

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Real Estate Market ReportPoised for Significant
Growth!

• Lost 70,000 homes and 11,000 short term rental
  units in one day.
• Experienced huge growth in tourism and job market
  coupled with a major lack of places to put
  people.
• Casinos allowed on land has changed the face of
  the coast now they are coming back everywhere!
• Go Zone Tax Law best ever for investors, least
  understood and taken advantage of!
• Katrina gave us a clean slate on which to
  rebuild RIGHT!
• Annual retail sales has increased 61 over 2004,
  51 over 2005.
• 444 Million currently being built that is NOT
  Casino NOR Condo Development
• 45 of all new jobs in MS are IN Harrison County
• Voted in the Top 3 Places to Invest according to
  Forbes Magazine!
• THIS IS AN EMERGING MARKET

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Real Estate Market Report

• The construction industry will not only be busy
  for the next 3 to 5 years rebuilding the 70,000
  housing units lost in the storm but also new
  casinos and commercial construction that will
  follow PLUS the new housing needed to support the
  increase in jobs coming to this area!
• This area is experiencing growth outside the
  Casino industry. For Example, Northrup Grummon
  was awarded a 1.4 Billion contract to build
  destroyers as well as working with EADS on the
  40 Billion contract to build the in-air fueling
  tankers.
• Stennis Space Center, on the MS Gulf Coast, is
  working with Boeing right now on building and
  testing the RS-68 Rockets creating 150 new jobs!
• From September of 2005 to December of 2007, 23
  service and 10 manufacturing industries opened or
  expanded with a capital investment of 121
  million!
• The near by economy of Mobile, Al. was awarded
  the largest steel mill ever to be built in the
  USA bringing in 3,700 permanent jobs and
  creating up to 38,000 jobs to support the
  facility (transportation, entertainment, etc.)
  Mobile is the number 1 fastest-growing county in
  the US for the next 5 years!

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Plans for rebuild Biloxi East. City
says Building on its pre-Katrina direction,
ultimately East Biloxi becoming a tourist,
entertainment and gaming destination of national
stature!
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The Opportunity

• To purchase in an Emerging Market.
• To be a part of the next tier 1 resort
  destination in the USA.
• To be able to stay in as long or as short as you
  want and still make AMAZING returns on invested
  capital.
• To be able to purchase something that can not
  only support itself but potentially have a cash
  throw off!
• To be able to use money you otherwise get no
  personal benefit from to build your retirement
  portfolio.
• To take advantage of a unique TIME in a brand new
  market where you can get in lower than EXISTING
  market allows!

Call the Clara Plummer Group 228-327-0885 claraplu
mmer_at_gmail.com
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BUY NOW Be in the NEWEST, HOTTEST market!!! And
depreciate 50 THIS YEAR!