Cost Segregation is a strategic tax planning tool that allows you to increase cash flow and accelerate your federal and state income tax depreciation deductions on real estate you have purchased, constructed, expanded, or remodeled including landlord or tenant improvements.
A Cost Segregation Study identifies, segregates, and reclassifies all building costs that qualify for shorter depreciable lives. Many costs that were originally classified in commercial real property categories, with a depreciable life of 27.5 or 39 years, can be reclassified into personal property or land improvement categories with shorter depreciable lives of 5, 7, or 15 years. This accelerated depreciation reduces taxes and increases net income.
Cost Segregation Studies benefit new construction, building acquisitions, and renovations to existing property, including leasehold improvements by lessor or lessee and improvements by an owner/occupant.
Cost Segregation Studies are supported by over 200 IRS and tax court rulings, including the Hospital Corporation of America V. Comm. 109 TC 21 in 1997, which provides legal support to use Cost Segregation Studies for the reclassification of assets and computing depreciation.
reclassification of assets can range from 10 to 70% depending on the
type of facility. Many clients receive a net present value cash
flow savings of 10 to 20 times their investment for the cost
segregation study. In addition, the IRS allows for “Catch-Up”
Depreciation on reclassified assets.
For a No-Cost Estimate, please contact:
Bob Yazowski 402-699-4960