What is Cost Segregation and how will it save you money?
Cost Segregation is an IRS approved method for accelerating building depreciation for Commercial properties. It is a detailed process which includes identifying the building components that should be properly classified as tangible personal property or land improvements, rather than real property that is depreciated over 39 years.
What will Cost Segregation do for you?
- Create Immediate Income Tax Savings
- Increase Cash Flow—Accelerates depreciation deductions and defers income tax payments
- “Catch-Up” on Depreciation of Older Assets—These studies allow a property owner to “catch-up” previously underreported depreciation without filing amended tax returns. All “catch-up” depreciation can be taken in the current tax year.
How much can you save?
More often than not, property owners view building components as part of the entire structure and depreciate all of it over 39 years. But a lot of those components, when properly segregated from the building structure, can fall into categories with much shorter depreciable lives. For instance, will your carpet last 39 years? Of course not, it’s classifiable as 5-year property. The landscaping, the parking lot, lighting and plumbing fixtures, cabinetry, electrical systems, computer fixtures… all of these items are classifiable into shorter asset lives. You’re going to see a huge benefit immediately.
What about for sold properties?
An owner can conduct a Cost Segregation Study on properties sold within the last three years even though they're not currently part of their holdings. A Cost Segregation Study can help these owners to receive a refund of overpaid taxes on those properties. This tax savings is money that would never have been realized without a cost segregation study. By doing a cost segregation study you will take gains on the lowest rates possible, thus saving significant tax dollars.
Call me today to learn more, and for your Free No Obligation Benefit Analysis!