Taxpayers have used cost segregation studies to determine what constitutes § 1245 (personal) or § 1250 (real) property for many years. Historically, these cost segregation studies have resulted in advantageous depreciation deductions for taxpayers.
We specialize in cost segregation projects and property analysis that fine-tunes the “life” of a building’s components into asset classes with shorter class lives. The end result for taxable entities (individual, LLCs, etc.) is real property can recognize non-cash expenses (depreciation) to provide higher after-tax return on investment.
Most tax returns include depreciation of personal property such as equipment and furniture over ﬁve or seven years. But many also miss out on other available federal and state tax beneﬁts by depreciating their entire investment in constructing or acquiring a building over 39 years. Such an oversight can cost you thousands of dollars in improved cash flow.
A cost segregation analysis identiﬁes speciﬁc building-related capital assets that are expensed on the income statement through depreciation expense. Many of these assets qualify for shorter federal tax depreciation lives. A cost segregation study can lead to a substantial reduction in federal and state income taxes in the early years of a building’s life by accelerating tax depreciation deductions.
A cost segregation study should be considered if you are:
- Constructing a new building
- Purchasing an existing building
- Undergoing a renovation or expansion
- Constructing leasehold improvements
Cost segregation studies are one more way we work with you to create, grow and protect your wealth.
Contact firstname.lastname@example.org or call @ 307-228-1066