Cost Segregation
A cost segregation study is a detailed review of a building construction project, or a building acquisition, to identify costs which qualify under the tax law for increased depreciation deductions.
The structural components of a commercial building have a 39-year depreciable life, and residential buildings have a 27 and a half-year life. In many cases a significant portion of the overall construction project or building acquisition cost can be allocated to items that qualify as personal property or land improvements that have 5, 7, or 15-year depreciable lives.
The benefits of a cost segregation study are the realization of tax savings from the real estate investment much sooner. This will increase the cash flow to the investor.
The process requires a thorough knowledge of the court cases, IRS rulings, and procedures that deal with cost segregation. Our tax experts have many years of experience in classifying depreciable assets.
A cost segregation study to save tax dollars should be considered if you are:
- Constructing a new building,
- Purchasing an existing building,
- Undergoing a renovation or expansion,
- Constructing leasehold improvements, or
- You acquired or constructed a building after 1986 and might benefit from correcting errors in depreciable lives effecting prior years.
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